In today’s world Globalization has led to transformation of many factors due to which firms must compete in a complicated and challenging environment. The main question that the companies have in the field of strategic management is to answer how to achieve competitive advantage. It is achieved when a firm exceeds the average industry standards. Or in other words when a firm outperforms its rivals and gain a competitive edge through combination of attributes . It is about how a company can leverage on the advantage to become profitable and do what they do best. Now it has become a crucial part of the market, every company is striving for competitive advantage. For example companies like Oracle and Microsoft are following a Resource Based View by using Technological assets.
Adapting and rapidness in innovative products with the combination of internal and external competences are the characteristics of a successful company. Competitive advantage is not necessarily permanent it can be temporary as well if the advantage is replicable and imitable.
Diag. 1.1: Competitive Advantage
Resources and Capabilities
Firms are mixed bundles of resources and capabilities. To make the firm stand unique than the competitors firm’s set their core competences that are combination of resources and capabilities.
Resources are specific assets with firms that give it some form of leverage advantage in terms of business activities. They are broad in scope and used to create differentiation and cost advantage through Tangible and Intangible resources.
Tangible Resources are assets that can be seen and observed like equipment, firm’s borrowing capacity, access to raw materials, copyrights, trademarks etc.
Intangible Resources are resources that ar...
... middle of paper ...
...nnot be easily imitated by the rivals. For example Indigo Airlines used this approach by their motto of giving high quality services at a very low price, lowest among the rivals, which attracted customers. Their man force (employees), superior quality of service and low prices for ticket was their resources and core competencies, which for a long time rivals were not able to imitate. We can conclude that it is an approach, which is very helpful for the companies to keep their competitive edge, but as the technology is getting advanced day by day there is nearly nothing that cannot be imitated. With many advantages competitive advantage also has few drawbacks sometimes companies go blind in the race for leaving their competitors behind that they start doing illegal things. For Example using low quality raw materials or .. to save the manufacturing cost of the product
Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources. Capabilities describe environment and strategic environment. Core competencies include knowledge and technical capability. In this section we will attempt to describe in detail the three segments which are resources, capabilities, and core competencies.
Pitts and Koufopoulos (2012) argue that resources and capability are highly important internal factors that should be taken into account by the organization in order to obtain the successful performance in the long run.
Oddly enough, Focus Features and Focus Features World Wide, which for the purposes of this analysis will be lumped together, remains one of the few art house/independent movie studios that is owned by one of the major six studios. Ironically, this distinction also lends Focus Features a distinct advantage. Typically, the independent film industry requires a studio to distribute/produce a certain number of projects in order to fund initial overhead or licensing costs. This puts a significant financial strain on the smaller market firms and increases risks. While, the project quota remains true for Focus, it is by choice and not by financial necessity. Focus is able to utilize its parent company, Universal’s wide reaching distributive and marketing scope, making Focus’ project performance less variable while fixed costs remain low. However, this corporate structure poses obstacles as well. Independent film studios put a considerable amount of resources into finding or developing content of acceptable quality. This never ending hunt must be balanced against stringent financial targets imposed by Universal. Seemingly, these do not mesh, but due to Focus’ business model, which takes a calculated approach to releases and relies heavily on festivals to generate buzz. By releasing movies in only a moderate number of theaters first, it allows Focus to use their budget for marketing more effectively. Surprisingly, Focus is able to operate almost completely separately from Universal relying on its growing library sales, and international distribution rights to cover its annual operating expenses, including overhead, development, production, acquisition, marketing and distribution costs. More specifically, Focus’ international sales “arm” gi...
Throughout the global economic environment the desire to out-perform the competition is always present. In every situation, the companies who do better are the ones with superior strategy (Rothaermel, 2013). Strategic management is therefore important in every company, no matter what industry or market they operate in; and as stated by M. Carpenter and G. Sanders, 2013, is described as "The process by which a firm manages the formulation and implementation of its strategy". Strategic management is a constant topic under discussion with different schools of theorists with different beliefs and attitudes which is described as "A tense array of disagreement" (Rees, 2012).
Assets are useful or valuable things that an individual or organisation has. This could include certain skills, abilities or personal qualities that an individual may possess and the organisations and resources they have access to within their community. An asset-based approach focuses on what people have and can do rather than what they are lacking and cannot do. Organisations work with individuals focusing on their valuable qualities in order to takes steps in working towards a positive outcome for the future.
It is also perhaps not feasible to evaluate the attractiveness of an industry independent of the resources a firm brings to that industry. It is thus argued that this theory be coupled with the Resource-Based View (RBV) in order for the firm to develop a much more sound strategy. It provides a simple perspective for accessing and analysing the competitive strength and position of a corporation, business or organisation.
It is no exaggeration that to say that competitive strategy is the art of creating or exploiting those advantages that are most telling, enduring, most difficult to duplicate. Competitive strategy, in contrast with generic strategy, focuses on the differences among firms rather than their common missions. Competitive advantages can normally be traced to one of the three roots: (1) superior skills, (2) superior resources, and (3) superior position. Positional advantage is of two types, first mover advantages and reinforcers. First movers may also gain advantages in building distribution channels, in trying up specialized suppliers, or in gaining the attention of customers. Reinforcers are policies and practices acting to strengthen or preserve a strong market position and which are easier to carry because of the position. Other position-based advantages include the ownership of special raw material sources or advantageous long-term supply contracts; being geographically located near key customers in a business involving significant fixed investment and high transportation costs; being a leader in a service field that permits or requires the building of a unique experience base while serving clients; being a full-line producer in a market with heavy trade-up phenomena; having a wide reputation for providing a needed for providing a needed product or service trait reliably and dependably.
of a firm to attain new forms of competitive advantage (Müller, 2011). It is due to these
The concept of core competence is somewhat significant in a business in terms of winning a sustainable competitive advantage (Boar, 2001). The competitiveness draws from an ability to build the core competencies that generate unanticipated products and services. Indeed, this should at least cost and steps ahead of competitors. In other words, the advantages originate from management’s capability to consolidate organization-wide technology and production skills into competencies that allow individual businesses to adapt quickly to changing opportunities (Prahalad and Hamel, 1990). Meanwhile, the concept of dominant logic in a very influential paper defined the corporation perception's “core competence” as “the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies.” Here again, it focuses on intangible and not tangible assets as a basis for competitive advantage in choosing and executing corporate strategy (Barney and Arikan, 2001).
Resources are organization’s productive assets and capabilities are what an organization is capable of doing. The relationship between resources and capabilities of a company forms a competitive advantage. Capabilities and resources help in gaining value and competitive advantage over competitors.
A company’s value chain can be created through a number of avenues. Tangible and intangible resources including knowledge, capabilities, skilled human resources, information systems, and company infrastructure can each be a distinctive competency. However, the multi-faceted business environment and industry dynamics can effectively erase a company’s advantage over time. This is particularly true with tangible resources. It’s easy for competitors to imitate one another. For example, all players in the package courier industry have invested heavily in tracking technology, shipping labels, and scanners. When UPS decided to move into the retail industry and acquired Mail Box Etc. in 2001, FedEx followed suit and acquired Kinko’s in 2004 (Hill & Jones, 2011). Marketing strategies related to pricing and promotions are also highly coveted.
Since market and profit advantages are continuously eroding by time, company has to be innovative and should be continuously competitive.
Hitt, M., Ireland, and Hoskisson, R. (2009).Strategic management: Competitiveness and Globalization, Concepts and Cases. In M. Staudt & Stranz (Ed.
The resource of a business that owner own are called assets for example building, machinery etc. In other words we can say the thing that owned by a person a regard to company and having value, commitment and legacies.
The purpose of this assessment is about how organizations create a culture of learning through knowledge and learning, and then gain a competitive advantage. First of all, all employees should be focused on sharing knowledge will be assessed through the importance of knowledge, sharing knowledge and knowledge management, both benefits and berries will be covered to discuss how knowledge can helps forming a learning culture to connect with competitive advantage. Subsequently, learning as another source of competitive advantages will be talked about why organizations should be focused on learning which is also connected with knowledge. At the same time, some learning theories, methods and approaches will be included in learning and development