Competitive advantages. Register to view the rest of this essay. Study on competitive advantages among three companies for the similar products. Literatures Review. Introduction. With increasingly fierce competition, the whole market is full of similar products; consumers are increasingly indistinguishable from the differences between them. For companies, it would be difficult to earn extra profits above the average level if they can not guarantee the uniqueness of its own products.
Furthermore, the increasing same products will decline the average profit of the whole industry. So, study on competitive advantages for the similar products is very important. The rest of the paper is organized as follows. Section 2, review the theories of competitive advantages, including positioning school, resource- based view, transaction cost theory and relationship- oriented school. Section 3, introduce how to get competitive advantages for the similar products, including reduction of cost, attraction of consumers, outsourcing non- core businesses and sharing profits. The origins of competitive advantages‘Competitive advantage' is widely used in many fields, and broader definitions include national, industrial, and firm levels.
It is the meaning of the advantage which is unique and difficult to replicate. On a global scale, developing competitive advantage has become the core strategy for many businesses. What are the origins of competitive advantage? Although existing research explains why some firms (and some industries) can get supernormal returns (Rumelt, 1. Mc. Gahan and Porter, 1. Positioning school. Early researches of competitive advantage were based firmly on historical analyses and qualitative research.
This work could be explained that competitive advantage is a complex phenomenon, which is depended crucially on the active presence of superior leadership (Selznick, 1. Chandler, 1. 96. 2; Andrews, 1. Chandler's work implies those firms who adopted the new M- form before their competitors gained a strategic advantage, and, moreover, that the choice to adopt the new organizational form reflected the structure and leadership qualities of a company's top management. Through the 1. 96. Then Porter turned this paradigm on its head (Porter, 1.
- Competitive Advantage. Competitive Advantage MGT/498 September 13, 2012 Competitive Advantage Riordan. Manufacturing is a leader in the industry of plastic.
- Top of page Strategy theory. Strategy theory concerns the explanations of firm performance in a competitive environment (Porter, 1991). There are many strategy.
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- Trace The Development Of Strategic Human Resource Management From The Resource Based View Of The Firm.
Register to view the rest of this essay Competitive advantages Study on competitive advantages among three companies for the similar products Literatures Review. Resource Examples of Relationship Marketing Applications Resource Evaluation Under Critical Requirements; Financial: Franchising: Limited potential as source of RBCA.
In transforming the study of ‘imperfect competition' into the analysis of ‘competitive advantage', Porter shifted the focus of strategy research outward, towards the analysis of the firm's microeconomic environment. In his book ‘The Competitive Advantage of Nations', he questions ‘‘Why (do) nations succeed in particular industries, and (what are) the implications for firms and for national economies?'' He stresses the important role played by ‘a nation's economic environment, institutions and policies' that lead to successful competitive industry development, and he states: Differences in national economics structures, values, cultures, institutions and histories contribute profoundly to competitive success. The home nation takes on growing significance because it is the source of the skills and technology. Porter's approach yielded sharply defined tools for understanding exactly why some firms (and industries) were likely to be more profitable than others. Porter developed the ‘diamond model' which he uses to discuss the determinants of national advantage based on four broad attributes of a nation: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry.
. capabilities of organization and sustaining more competitive. but not a theory of competitive advantage. Evaluation of Sony Corporation’s. One classic approach to strategy revolves around gaining competitive advantage through valuable, scarce and distinctive resources — such as a strong brand or.
Porter states: The determinants, individually and as a system, create the context in which a nation's firms are born and compete: the availability of resources and skills necessary for competitive advantage in an industry; the information that shapes what opportunities are perceived and the directions in which resources and skills are deployed; the goals of the owners, managers, and employees that are involved in or carry out competition; and most importantly, the pressures on firms to invest and innovate. Porter (1. 98. 5) identifies five structural forces to be considered when deciding on strategy and position in an industry: entry barriers, threat of substitution, bargaining power of buyers, bargaining power of suppliers, and rivalry among competitors in the industry. From then, the literatures are filled up with ‘five force analyses': build these kinds of barriers to entry, structure rivalry along these lines, and your firm and perhaps your industry would become more profitable. Notice that at its roots this stream of work returns to the founding assumption of the field: good strategy is about leadership, about foresight. Managers who are smart enough to understand the implications of structural analysis and to make the commitments that it requires are likely to outperform those who do not (Ghemawat, 1. Shapiro and Varian, 1.
According to Porter, there are three generic strategies for achieving a competitive advantage: differentiation, cost leadership, and focus. There are several bases for a differential advantage—for example, technological, legal, and geographical (Alderson, 1. Resource- based view. The resource- based view (hereafter RBV) of strategic management evolved from the work of Penrose (1. The Theory of the Growth of the Firm'.
Her theory was subsequently refined and named the ‘‘resource- based view of the firm'' by Wernerfelt (1. Prahalad and Hamel (1. Generally speaking, RBV is simply a reinterpretation of the environmental perspective. Where the latter describes analytically why a differentiated position within an industry coupled with high entry barriers can lead to profitability, the former redirects attention towards the underlying heterogeneity making such a position sustainable. For example, while early environmental analyses seemed to suggest that competitive advantage arose from purely technological factors (such as economies of scale) or from unique assets (such as a brand name reputation), the RBV emphasized the idea that these technological or market positions reflect internal organizational capabilities, such as the ability to develop new products rapidly, to understand customer needs profoundly, or take advantage of new technologies cheaply. Proponents of the RBV suggested that strategic investments directed towards these internal activities might be as (more) important as in generating supernormal returns. Furthermore, the RBV deepened the discussion of causality by focusing attention on two key insights about the sources of competitive advantage.
First, in many cases, an industry's ‘structural' features are the result of the organizational capabilities of its constituent firms: a powerful brand name, for example, may reflect years of successful new product introduction and superb (and unique) marketing skills. Second, there are many good reasons for thinking that the market for organizational capabilities may be imperfect in exactly the kinds of ways likely to lead to the existence of supernormal returns. In part because of these two insights (which are implicit but not always manifest in environmental analyses), the RBV is often positioned as an ‘alternative' to the environmental perspective.
In my opinion, such a positioning reflects a significant misconception, since the RBV and the environmental perspective are complementary in many important respects. Each proposes a model of why firms may sustain superior performance, but the two models are not mutually exclusive, at least in terms of their empirical predictions: while the environmental view focuses attention on external industry structure, the RBV directs us towards the fact that internal capabilities and investments provide the instruments and tools to shape this external environment. Moreover, both literatures offer a similar theory about the process of strategic choice. In the case of environmental analysis, while economics is used to explain what kinds of strategic positions are likely to be most profitable, the theory is essentially agnostic as to how firms come to assume them. Firms can be lucky, they can be fast, or they can be far sighted: as long as they deal with the ‘five forces' they will be profitable, and the power of the tools lies in explaining exactly what these forces are and what kinds of mechanisms will help a firm deal with them. At least at some level, many (perhaps most) empirical treatments within the RBV tradition follow a similar logic, with the caveat that rather than emphasizing the fact that one firm rather than another ‘chose' a particular market position or production technology, the analyses focus on the fact that one firm ‘chose' to develop a certain set of internal capabilities or unique organizational assets (Henderson and Clark, 1. Clark and Fujimoto, 1.
Eisenhardt and Tabrizi, 1. At a more subtle level, however, the RBV literature begins to address causality and the ultimate origins of competitive advantage more deeply.
It has implicit within it a significantly different view of the dynamics of strategic advantage, and, in particular, of exactly what managers can and cannot do. While the canonical reference for the RBV literature is usually taken to be Penrose (1. RBV perspective on the strategy process seems to be influenced more by Stinchcombe (1. Nelson and Winter (1.
Specifically, the RBV scholars often seem to suggest that organizations are fundamentally different from each other for reasons that may have very little to do with any kind of ‘strategic logic' and that they can only change through limited, local search. To the extent that competencies are built on organizational routines that are only tacitly understood indeed if tacit understanding and complexity are a prerequisite for any competence to be a source of competitive advantage then there may exist a fundamental tension between the fact that competencies lie at the heart of competitive advantage and the use of this insight to guide strategy choice (Leonard- Barton, 1.