Welcome everybody, to the module six of competitive strategy. In this module we will focus on strategic aspects of product design. Or, to put it differently, we will ask how to design your product wisely. When talking about product design and creativity, there's actually no better place to be, than the University of Fine Arts in Munich. And this is going to be the venue for the coming video lectures. What's on the menu for today? Well, we'll start out with a phenomenon that's commonly known as the Bertrand paradox. Put very simply in a hypothetical, theoretical world with reasonable assumptions, two firms that sell the same products may end up, in a perfectly competitive situation and make zero profits. And that's of course a horrible scenario for any firm. In reality however, we see that there are some aspects that lower the competitive pressure, and that make it possible for firms to earn a substantial amount of money. And the interesting bit is that firms do not have to take these aspects as given. They can actively try to influence them, in their favor. Which therefore makes it relevant and interesting for business strategy, which is what we're going to look at in this module. And we'll take some time to discuss this in detail. And one aspect that is particularly important is product differentiation. And here we will study the difference between vertical and horizontal product differentiation. And we'll see what firms can do about it and how it's going to affect profits. Later on, we will discuss some generic strategies of product design and pricing. And specifically, we're going to look at cost leadership, a strategy of differentiation and the focus strategy. We'll figure out that it's not a good idea being stuck in the middle between these different competitive strategies. And we will look at ambidexterity as one possible way of solving this problem. So all of these topics, have a high practical impact, and they're relevant for many business decisions. So let's get started, and I'll see you in the next video.