1. Advise a start up wine bar on a differentiation strategy to create profitability. Use Figure 7.1 to describe the development or emergence of a competitive advantage using internal and external changers that meet customer needs and create differentiation opportunities.

2. A wine bar cost is typically 18 to 25% of sales. So net profit is roughly 80% before other expenses. Once you include labor and overhead it's slightly better than food cost. Total profit, on average around 10% of gross sales. Of course there are substantial price differentials between different wine brands. What are the key differentiation variables that determine the price premium that can be obtained for various wines?

variable differences. FIGURE 7.1 The emergence of competitive advantage How does competitive advantage emerge? External sources of change, e.g., Internal sources . Changing customer demand of change . Changing prices of inputs . Technological change Some firms capable of Resource heterogeneity Some firms are faster strategic innovations (e.g., among firms creates and more effective new business models or locating "blue oceans") winners and losers in exploiting change