Essay About Competitive Advantage And Others Canðžð

Benefits Of Strategic Management
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Competitive Advantage in Strategic Management
A business without strategy is a business without direction. A strategy
without a competitive advantage is a business without a precondition of
success. Managing strategically is to make decisions and implement strategies
that allow an organization to develop and maintain competitive advantage.
Competitive advantage is a concept that motivates strategists to replicate the
strategies that make most successful companies successful. According to this,
we can learn that competitive advantage is a very important concept in
strategic management. Next, I will look deeper into ЎowhatЎЇs competitive
advantageÐŽ±.
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 donЎЇt does something better than other firms do, or does
something that others canЎЇt, 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. Getting and keeping it is what managing
strategically is all about. ItЎЇs tough to do, and getting tougher.1
There are 2 major views of alternative model of superior returns. Industrial
organization (I/O) view and resource-based view. The industrial organization
view focuses on the structural forces within an industry, the competitive
environment of firms and how these influence competitive advantage. The
external environment determines the potential for profits. Firms within the
same industry have similar resources and pursuer similar strategies.
Resources are mobile across firms (because of this, seemingly unique
differences among firms in the same industry will quickly vanish, competing
firms will adopt or purchase similar resources. Resource-based view takes the
approach that a firmЎЇs resources are more important than industry structure in
getting and keeping competitive advantage. It sees firms as very different
collections of assets and capabilities. The internal resources and capabilities
are the source of a firmЎЇs profitability, not the external environment. Firms each
have unique resources and capabilities. Resources are not necessarily mobile
across firms.2 Although the resource-based view focuses on analyzing
internal organizational factors, it doesnЎЇt ignore important external factors. It
links an organizationЎЇs internal capabilities with its external environment.
Competitive advantage will accrue to the firm that possesses unique assets or
capabilities. A resource-based view emphasizes that a firm utilizes its
resources and capabilities to create a competitive advantage that ultimately
results in superior value creation. According to the resource-based view, in
order to develop a competitive advantage the firm must have resources and
capabilities that are superior to those of its competitors. Without this, the
competitors simply could replicate what the firm was doing and any
advantage quickly would disappear.
below is to compare the I/O and RBV views of strategic management.3.
Table 2-1: comparison of I/O and Resource-based Views
Factor I/O Resource-Based View
Competitive Advantage Positioning in industry Possessing unique organizational assets or capabilities
Determinants of Profitability Characteristics of industry; firms position within industry
Type, amount, and nature of firms resources
Focus of Analysis External Internal
Major Concern Competition CompetenciesЎЄResources
Strategic Choices Choosing attractive industry; appropriate position Developing unique resources and capabilities
Resources are the firm-specific assets useful for creating a cost or
differentiation advantage and that few competitors can acquire easily. It can
include all of the financial, physical, human, intangible, and structural-cultural
assets used by a firm. The following are some examples of such resources:
Patents and trademarks, proprietary know-how, installed customer base,
reputation of the firm and brand equity and so on. Capabilities refer to the
firms ability to utilize its resources effectively. An example of a capability is the
ability to bring a product to market faster than competitors. Such capabilities
are embedded in the routines of the organization and are not easily
documented as procedures and thus are difficult for competitors to replicate.
The firms resources and capabilities enable innovation, efficiency, quality, and
customer responsiveness, all of which can be leveraged to