According to this, we can learn that competitive advantage is a very important concept in strategic management. Next, I will look deeper into ¡°what¡¯s competitive advantage¡±. Competitive advantage is what sets and organization apart. When a firm sustains profits that exceed the average for its industry, it has something that other competitors don¡¯t does something better than other firms do, or does something that others can¡¯t, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage.
It follows from the concept of core competencies; resources that are standardized or easily available will not enable a business to achieve a competitive advantage over rivals (Marketline Business Information Center, 2007). What makes each company different is the core piece that enabled it to establish itself in the market. Different companies have different assets to exploit (Moore, 2005). If a company can define what their core competencies are then the company has a better chance to innovate. Innovation is the key to a company’s longevity in the market, keeping the company and or the product from moving into the decline phase.
Contemporary organizations are faced with the challenges of changing economic and market conditions, productive labor, competition, and the struggle for survival. Traditionally, organizations have focused on material assets, cost cutting, and reduced employee expenses as a means of increasing competitiveness and profits (CSU-Global, 2013). However, this approach is becoming a less viable tactic in today’s complex and dynamic environment. Instead, an organization must recognize the value and importance of its people in implementing the strategies which lead to business success (CSU-Global, 2013). This places an organization’s human resources (HR) in a prominent role when developing strategic plans for the future.
An organization with low commitment to strategic management may be unable to quickly adapt to the changing business environment and, therefore, companies that implement strategies in their workforce have a competitive advantage over them. For instance, the CSR practices that were outlined above can become a part of organizational strategy and increase the legitimacy of company’s actions, attract investment and raise profitability. It is also important to understand the strategies of competitors whilst developing your own. When a company analyses the strategies of competing businesses, it can manage its own strategies and put itself in the reactive position with the ability to control and influence the business environment (Robert 1990). When an entity understands its competitor’s strategy, it can adopt successful elements of it and adjust its own organizational strategy, making it more effective.
Therefore, those benefits may promote CSR among companies (Gazzola, 2012). Although many articles stated that profit and CSR have positive relationships, research found that factors such as labour market conditions and company’s size and so on will all influence the level of CSR in a company (Abagail and Donald, 2001). Abagail and Donald (2001) found that “there is a neutral relationship between CSR and financial performance”. Ivar (2007) thought investment on CSR will not contribute to corporate profit or companies will get very few return from CSR relative activities. More profit making by companies will not result in more CSR investment.
The science of business is to develop a strategy that affords a firm the best possible outcome with respect to the return on investment (ROI). Where abnormal returns are recognized the competitive landscape of an industry grows. The prevailing thought is competition drives consumer benefit. The consumer benefits because competition will lower pricing and improve offerings. As firm’s attempt to climb the mountain of market leadership they often discover the ability to remain on top can be short lived.
When viewing strategic planning from the highest level possible within a company, the planning function is the area that stands out as the most important area which involves a great deal of development and focus. Why strategic planning? The interest in the strategic planning is caused by several reasons: 1. Realization of the... ... middle of paper ... ...ompletes an analytical assessment of a firm. A firm establishes its competitive building by investing scarce resources again and again in its value-added activities.
“Profitability is the primary goal of all business ventures. Without profitability the business will not survive in the long run” (Hofstrand 2009:1). Sustainability suggests that organisations can accomplish competitive advantage with better than expected returns by creating value, managing uprightly, and being sustainable, corporate global citizens with social, environmental, and economic propriety (Louw & Venter 2013). Sustainability is about the capacity to meet the needs of people and their communities, and organisations, not only for the short term but over the long term (Tucker no date). Profitability and sustainability are not totally unrelated, profitability is a transient concentration, while sustainability is a long-term focus (Louw & Venter 2013).
Business enterprise should use first-rate administration and management advantage in making strategic decisions to achieve organizational objectives. An excellent leadership style is required for the agency to be successful. If proper management sort just isn't adopted the enterprise would now not be in a position to acquire its industry goals. As Gosling suggested that management has plan and methods and so they specializes in execution of the process, at the same time a leader continues human resource, it direct the employees, manage, coordinate and encourage them to execute the process with their first-class efficiency to accomplish the final mission of the
Strategic plans prove to be a vital resource for the success of a lot of businesses. While a strategic plan is not required, research shows that most successful companies have a strategy plan in place and some means of testing the effectiveness of the plan along the way. As a leader within an organization you have an obligation to provide guidance and direction for the company. A strategy plan is defined as being "management 's action plan for running the business and conducting operations" (Thompson, A., Strickland, A.J. and Gamble, J., Crafting & Executing Strategy The Quest for Competitive Advantage: Concepts and Cases, 2009 Custom Edition, pg.