Mgt 498 – Competitive Advantages
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Competitive Advantages
MGT/498
Competitive Advantages Paper
Many successful companies consider themselves competitive in their industry. An organization must determine what makes them competitive and what gives them an advantage over the other companies that may do the same thing. Riordan Manufacturing has seized the advantages of global industry, outsourcing, and innovation to put them at the top of their respective field. The opportunity exists for Riordan, however, to achieve even higher advantages by considering a growth strategy and evaluating a process for decreased costs in production. This paper will give a brief explanation of the competitive advantages of Riordan Manufacturing.
Competitive Advantages Common with Other Companies
Riordan Manufacturings business strategy and product innovation helps the company keep a competitive advantage through pricing and efficiency while continually developing new technology. When comparing Riordan with any other organization in the realm of the same business, we need to focus on the differences between the organizations within the market.
Riordan, with their joint venture in China that manufactures plastic fan parts, knows that in order to compete they must configure a strategic plan to insure a competitive advantage. Riordan, like many other companies has competitive advantages over manufactures in the same industry.
Riordan has a specialized product line that allows them to sustain high profit margins. They specialize in the injection molding of plastic polymers. This process enables them to lower their prices and increase profits. The process is a less expensive way of making a stronger plastic product for a lower price and gain customers.
Riordan knows that Business Processing Outsourcing is a necessity for any company that is interested in globalization. Businesses that do not outsource will inevitably fall behind due to higher prices and lower profit margins. BPO is an advantage that Riordan has because of the countries they can outsource to such as Mexico, Philippines, and India who can do it faster, cheaper, and better. By outsourcing some of the work Riordan can concentrate on what they do best.
U.S. Competitive Strategies to Improve Innovation and Sustainability
Riordan has two manufacturing sites in the U.S. including one location in Michigan, which manufactures custom plastic parts for the medical industry; Riordans headquarters and research and development centers are also in the U.S. Given that Riordan is already an industry leader in the field of plastic injection molding, a growth strategy would be appropriate for Riordan in the U.S. While the demand for bottled beverages does not have potential for growth and may actually be on the decline (“Bottled And Canned Soft Drinks And Carbonated Water”, 2012), the demand for medical devices is likely to increase significantly as the Baby Boomer population ages. “The average annual growth [of health care spending] is estimated to be 5.8% from 2010 to 2020” (Mann, 2012). Thus, a concentration of R&D resources around heart valves, medical stents, and further developing other custom plastic parts manufactured in the Michigan location for the medical industry would be a very competitive strategy for Riordan in the U.S. (University of Phoenix, 2012).
Global Competitive Strategies to Improve Innovation and Sustainability
Riordan has an opportunity to decrease costs in production so they can keep their costs low for consumers. Maintaining low costs for consumers allows Riordan to have a competitive advantage because it equals higher profits for the company. Riordan can analyze its raw material supply vendors to ensure they have the most economical vendor. If there are other vendors that are more cost effective they can change vendors. Increasing profits will increase sustainability for the organization. How quickly the vendors can supply the materials is important. If Riordan is shipping products overseas to compete on a global level, it needs to receive the supplies promptly in order to create the final product and get it shipped quickly. The longer the supplier vendor takes to deliver the supplies, the longer Riordan takes to create the supplies, which ultimately leads to a longer time that the global consumers have to wait to receive their products. Riordan has a long-standing agreement with the manufacturer of their electric fan motors. This manufacturer sends the motors to Riordan for completion of the product. Having this agreement ensures Riordan the same quality motor that their customers expect without having to wait for production by different suppliers (University of Phoenix, 2012).
Riordan also needs to be innovative with their products and make changes when necessary. Implementing the focus strategy can ensure this (Porters, 2008). For instance if the demand for bottled beverages is declining because of environmental and health reasons, Riordan needs to create products that are more environmental friendly and health conscious. This will give Riordan a competitive