Competitive Advantage
Every organization is a victim of its own success, so there is a need of diversification, which creates a different mix of talents and capabilities. It must learn how sustain competitive advantage it should protect itself from being despoiled and assimilate new sources of technologies, skills and core competencies.
Competitive advantage is at the heart of firm 's performance. It is concerned with the interplay between the types of competitive advantage, i.e., cost, and differentiation, and the scope of the firm 's activities. The value chain plays an important role in order to diagnose and enhance the competitive advantage. A sustainable competitive advantage creates some barriers that make imitation difficult. Without a sustainable competitive advantage, above average performance is usually a sign of harvesting (Porter, 1985).
Competitive advantage is, in very basic words, a position a firm occupies against its competitors. According to Michael Porter, the three methods for creating a sustainable competitive advantage are through:
1. Cost leadership - Cost advantage occurs when a firm delivers the same services as its competitors but at a lower cost.
2. Differentiation - Differentiation advantage occurs when a firm delivers greater services for the same price of its competitors. They are collectively known as positional advantages because they denote the firm 's position in its industry as a leader in either superior services or cost. 3. Focus
What are the two types of core competencies that drive a firm’s competitive advantage? Which firms demonstrate a clear competitive advantage because of (a) major value-creating skills/core capabilities and/or (b) superior assets or resources? Which firms have demonstrated sustainable sources of competitive advantage?
The two core competencies that drive a firm’s competitive advantage are cost leadership and differentiation.
To do this it needs to have a competitive advantage over its its rivals. A competitive advantage is something a company does better than its rivals that gives it an advantage over its rival. Porter (1988) states that a firm performs many activities that can contribute to a firms relative cost position and create a basis for differentiation which can create a cost advantage that gives a firm a competitive advantage over its competitors. A company’s competitive advantage and competitive strategy are both interrelated. Competitive strategy is defined by Porter (1980) as a broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals.
It can be said that by means of organisation’s competitive strategy, it can achieve an upper hand in the business market over its rivals. Competitive Advantage offers a beneficial position to business organisations over rivals in regards of some measure like expense, quality, or velocity. An efficient strategy can help an organisation to achieve an upper hand through commitment to its strategic objectives and the capacity to significantly expand execution and profitability (Bartlett & Ghoshal,
Competitive advantage is when two or more firms compete within the same markets, one firm possess a competitive advantage over its rival when it earns (or has potential to earn) a persistently higher rate of profit. There are three types of competitive advantage.
a) Cost leadership strategy occurs when a firm a delivers the same services as its rivals but at a lower price.
b) The differentiation strategy occurs when a firm delivers greater services for the same price of its rivals.
c) Focus strategy is a focused approach requires the firm to concentrate along one specific segment either a cost leadership or a specialization strategy.
They have achieved such a success based on the way they have organized their operations. Competencies are very important for an organization to build up on their own. Competencies can be of two aspects namely core competencies and threshold competencies. A core competence can be identified as a unique set of skills or production techniques that deliver a particular value to the customer. A threshold competence can be identified as a quality that need to maintain by the organization in order to remain competitive in the market (Rohwedder & Johnson,
The value chain equates to the internal activities that a company employs in transforming its inputs to outputs; this helps with the improvement of activities, helping the company to achieve competitive advantage.
In the analysis of H&M’s organizational capabilities the value chain analysis would show that with viewing the internal activities; this analysis would show where the company’s competitive advantages as well as disadvantages lies. This analysis would then depict the company’s core competencies.
When a company is said to be competing through its cost advantage; it would most likely try to carry out its internal activities at a much lower cost than its competition would want to.
ACHIEVING GLOBAL COMPETITIVE ADVANTAGE OF APPLE INC.
Apple Inc. is an American conglomerate company located in one immeasurable loop, Cupertino, California in the middle of the Silicon Valley. (OPPapers, 2012). Apple is motivated on their designing, developing, innovating new products like the personal computers, other related software products, and the electronic products such as MP3 players and iPods. Apple Inc.’s main products are iMac, iPod, iPhone, iPads and its latest advanced product is iWatch, which is on the edge of creating another revolution after iPhone. Apple Inc. has transformed its image from an inventive computer manufacturer to a fully-fledged consumer 's electronic company.
Based on four attributes, first one is Factor endowments that focus on basic factors natural resources, climate, location, demographics second one is advanced factors such as communication infrastructure, sophisticated and skilled labour, research facilities, and technological know-how. Third one will be advanced factors are a product of investment by individuals, companies, and governments. Porter argues that advanced factors are the most significant for competitive advantage. Lastly demand conditions that look at customer need or the demand on which is being produced, companies will have to produce innovative, high quality products early, which lead to competitive advantage. Relating and supporting industries, if suppliers or related industries exist in the home countries that are themselves internationally competitive, this can result in competitive advantage in the new industry, firm strategy, structure, and rivalry.
5.3 Country position and attractiveness
According to Porter (1990), the level of competitiveness on a country depends on the capacity of the industry and the skills to upgrade and innovate. The competitive advantage is produced and sustained on the differences in values, economics structures, culture, institutions, history, and other factors that contribute to competitive success. Therefore, companies as well as nations have to fight for a position on the market as centers of production or industrialization of products.
Competitive strategy is a suit of methods and action sequence deliberately planned and put into place by companies in the face of market competition. This seems to be a clear way of keeping their market shares, expanding sales and managing the product lines to deliver desired results.
The corporate world often needs some sorts of solid strategies considering the trends of the market competition. Beyond the issues of quality and distribution, companies often need to plan ahead and protect their market share in the sale.
Mr Price has a wide range of competitors such as H&M, Woolworths and Pick ‘n Pay. A competitive advantage describes how the business has benefits or strengths over its competitors in the market. By having this, the competitors don’t seem as a threat to the company. It’s used
The four building blocks of competitive advantage can be used to help a company become more profitable and stay ahead of their competition. The four factors are superior efficiency, quality, innovation, customer responsiveness. All four building blocks are important to any company. However, I believe that customer responsiveness is the most important because having loyal and happy customers can make or break any company. The four building blocks can help companies grow and become the leader in their industry over their rivals.
