...produce firms with sustained competitive advantages in some industries more than others? Answer with reference to examples from at least two different industrial sectors. Answer. Porter’s diamond model is a model that can help understand competitive position of location in global competition that suggest a inherent reason why some firm within location are more competitive that other on a global scale. The argument is that the local are provided organization by specific factor, which created more potential competitive advantage for country or region. The Porter's model includes 4 drivers of local advantage, which are shortly described below: 1. Local factor conditions A company in local is exploited by factor conditions. Factor conditions can be seen as advantage factors such as workforce shortage, as a factor potentially strengthening competitiveness, this factor may heighten companies' focus on automation and zero defects. For example, in analyzing of film production industry in the Hollywood, has pointed out the local skilled labor, in the area. Also, resource constraints may encourage development of substitute capabilities; Japan's relative lack of raw materials has reduced and zero defect manufacturing. 2. Local demand conditions Focusing on the domestic market provide the primary driver of growth, innovation and quality improvement. The strong domestic market is stimulates by stat up the to a slightly expanded then became bigger organization. The firm potential...
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...Firms Strategies to Stay Competitive in the Market Table of Content ......................................... -2- Introduction ................................................ -3- Differentiation Strategy ................................ -4- Benefits & Challenges of Differentiation Strategy .................... -5- Apple ..................................................................................... -6- Low Cost Strategy ................................................................... -7- Benefits, Challenge &Mistakes of Low Cost Strategy ................ -8- Interview .............................................................................. -11- Conclusion............................................................................. -15- In the beginning, I would like to explain the major problem that is associated with economy in the whole world which is scarcity. We know that humans are greedy and they always want more of everything, so that is why we have the problem of not having enough resources to all people. Firms try to satisfy their customers by thinking of strategies that can make their customers satisfied and to stay competitive in the market. Looking from this perspective, I would like to introduce my topic about Firms Strategies to Stay Competitive in the marketplace. Firms can remain competitive through a lot of planned strategies. Being a competitor in the market requires constant monitoring of the...
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...SUSTAINABLE COMPETITIVE ADVANTAGES Yi-Pei Li, National Dong Hwa University, Taiwan, pn1880@ms23.hinet.net Yuh-Yuan Tsai, National Dong Hwa University, Taiwan, yytsai@mail.ndhu.edu.tw ABSTRACT Isolating mechanisms can create barriers to impede competitors from imitating resources, capabilities and strategies. The purpose of this study is to define key characteristics that will contribute to effective isolating mechanisms and find out a typology of effective isolating mechanisms. This study identified two types of isolating mechanisms, competitive and customers-based isolating mechanisms. And examples of normative strategies are provided for each type of isolating mechanisms to facilitate their application. Key words: Competitive advantage, Competitive isolating mechanisms, Customer-based isolating mechanisms INTRODUCTION The concept of isolating mechanisms has been developed in the literature to explain barriers that firms can establish to avoid imitation by competitors (Grant, 2005; Mahoney and Panidan, 1992). Isolating mechanisms can create barriers to impede competitors from imitating resources, capabilities and strategies. Isolating mechanisms are also instrumental in influencing industry dynamics, as they provide competitive barriers to imitation for new strategies, adopted in response to environment changes ( Segars and Grovers, 1995). Through the establishment of isolating mechanisms, the firms can sustain their competitive advantage and...
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...Strategic entrepreneurship - Innovation as source of competitive advantage Global organizations face the challenge of adapting frequently to meet the needs of their customers, suppliers, and share-holders. Creating value for stakeholders is becoming increasingly difficult even for leading players like General Motors (GM) and Ford. A stream of continuous value-creating innovations by global competitors (e.g., Toyota and Honda) has challenged GM & Ford to reinvent themselves continuously. The challenge of continuous and dynamic change is affecting firms across multiple industries. These include even the IT Services Industry such as Accenture / IBM / Infosys & TCS and their business models & Service models are changing the nature of competition. The winners and losers resulting from changes in this particular industry remain unknown. Consider a situation where Complete Customer relationship management service for any organization ( which will have been implemented, supported & serviced ) by any of the traditional players being replaced by a cloud offering from an organization Salesforce.com for which payment can happen on pay-per–use model & supported by niche player whose entire business model is predicated on this. Being able to create a more attractive value proposition for customers is making it quite difficult for some of the more traditional players like IBM or Accenture since that means cannibalization of their existing revenue stream, changing the Business model...
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...importance of firm-specific human capital which is likely to generate organizational rents, since those assets are more likely to be unique, sporadic, and thus a better basis for sustainable advantage. However psychological literature supports that generalized investments have value for the firm through it’s effects on worker’s commitment to the firm. This paper examines the impact of firm’s specificity in human capital versus generalization commitment of externalized workers. Externalized workers, face persistence pressure to maintain assets that are highly desirable in the market. Firms cannot offer lifetime contracts but nonetheless offer workers greater assurances of remaining competitive in the job market through more attention to general skills development and training. These skills increase the probabilities of the employees remaining employable, thus reducing their anxieties about the diminished job security (internal workers) or the stability of the employment relation (external workers), decreasing the likelihood of future or prolong unemployment. The study show more positive response in external workers when generalized investment by employers are made. Firms often fear to invest in externalized labor but the potential positive effects it has on employee’s commitment level are valuable outcomes of firm’s investments in general skills development and other transferable resources. The resource-based literature holds that the key strategic assets for a firm are its human...
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...It has been said that there is no such thing as a sustainable competitive advantage. Do you agree? Why or why not? I Disagree First what is ment by competitive advantage and maintaining a Sustainable, competitive advantage? Competitive advantage is gained when a firm acquires attributes that allow it to perform at a higher level than others in the same industry. Sustainable, competitive advantages are advantages that are not easily copied and, thus, can be maintained over a long period of time. The competition must not be able to do it right away or it is not sustainable. In other words a sustainable competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. These attributes can include access to natural resources or access to highly trained and skilled personnel human resources. It is an advantage (over the competition), and must have some life; the competition must not be able to do it right away, or it is not sustainable. It is an advantage that is not easily copied and, thus, can be maintained over a long period of time. Competitive advantage is a key determinant of superior performance, and ensures survival and prominent placing in the market. Superior performance is the ultimate, desired goal of a firm; competitive advantage becomes the foundation. It gives firms the ability to stay ahead of present or potential competition and ensure market leadership. In 1991, Jay...
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...The Resource Based View – Jay Barney A firm’s competitive advantage lies in its resources. It exams the link between a firms resource ans sustained competitive advantage. To sustain a competitive advantage it requires that these resources heterogeneous and immobile. The key point of the theory is to identify the firm’s resources and see if it is VRIN (Value, Rarity, In-imitable and Non substitutable) and then protect them. Formal planning is highly imitable and thus cannot be a source of sustained competitive advantage. An argument for heterogeneity is the first mover advantage where the firm may gain access to good distribution channels; develop good reputations before competitors come. Likewise theyre are barriers to entry. How to apply the resource based view: Definitons: It resources include all assets, capabilities, organizational processes, firm attributes, information, knowledge etc. controlled by a firm that will help its efficiency. This will be broken down into human, physical and organization resources. A sustained competitive advantage when it is implementing a value creating strategy not simulteously being implemented by any current or potential competitor and when these other firms are unable to duplicate the benefit of this strategy. Not on calendar time. Critique * Priem and Butlers critique to 1991 paper states it is tautological (it is true in all possible interpretations). That’s its primary assertions are true by definition, and, thus not subject...
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...Porter’s Competitive Forces Model Porter’s competitive forces model provides an overall view of the firm, its competitors, and the firm’s environment. In this model, the strategic position of the firm, and its strategies, are determined by competition with its traditional direct competitors. Porter’s model is about the firm’s general business environment. Five competitive forces in this model greatly affect and shape the firm. They are, traditional competitors, new market entrants, substitute products and services, customers, and suppliers. The competitive forces model describes competitive advantage as, firms doing better than the other because of access to more resources, or using commonly available resources more efficiently. With the help of a greater knowledge of information and resources, a firm’s revenue and productivity will grow. This positively effects a firm and helps to achieve more compared to competitors. Four competitive strategies that firms can pursue and how information systems support them: 1. Low-cost leadership 2. Product differentiation 3. Focus on market niche 4. Strengthen customer and supplier intimacy Information systems support the “Low-cost leadership” strategy through production. Products and services are produced at a lower price than competitors and enhances the quality and level of service. The “Product differentiation” strategy is supported by information systems by allowing the assembly of new products and services. Which...
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...OF COMPETITIVE ADVANTAGE: KINETIC AND POSITIONAL By: Ma, Hao; Business Horizons, Jan/Feb2000, Vol. 43 Issue 1, p53, 12p, 1 diagram Competitive advantage is considered the basis for superior company performance. To perform at such a level consistently, a firm often has to nurture an evolving system of competitive advantages to carry it through competition and over time. What are the various possible types of such advantages? How can a firm systematically analyze the multiple advantages it could possess and use them to achieve and maintain superior performance? Building on research in strategic management, answers to these questions and others can contribute to managers' knowledge about the nature and content of competitive advantage. Such knowledge can help managers nurture and renew their firms' advantages more effectively through time. The Dichotomy of Positional and Kinetic Advantages The essence of competitive advantage can be interpreted as the asymmetry or differential among firms along any comparable dimension that allows one firm to compete better than its rivals. Simply put, a competitive advantage can be one of two types: ° positional--a status-defining position that leads to better company performance; or ° kinetic--an action-oriented ability that allows a firm to function more effectively and efficiently. Positional advantage often derives from ownership or access-based sources. Specifically, it comes from a company's unique endowment of resources, market...
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...Chapter 5 – Summary Review Questions 1. Explain why the concept of competitive advantage is central to the study of strategic management The concept of competitive advantage is central to the study of strategic management, since a company (or an organization) must follow an aligned strategy to outperform their rivals in the industry. Michael Porter introduces three generic strategies that a firm may apply in order to do so. (Overall cost leadership, Differentiation and Focus). In order to create and sustain competitive advantage, companies such as KFC (case in beginning of CH5) should analyze the value chains of their customers and suppliers to see where they can add value. Furthermore studies have shown that businesses combining multiple forms of competitive advantage outperform those that used only a single form. “Stuck in the middle” firms are those who do not apply any of the forms. These are the ones that perform the worst. 2. Briefly describe the three generic strategies – overall cost leadership, differentiation, and focus. Overall cost Leadership: “Generic strategy based on appeal to the industry wide market using competitive advantage based on low cost.” Requires a tight set of interrelated tactics that include: * Aggressive construction of efficient scale facilities. * Vigorous pursuit of cost reductions from experience * Tight cost and overhead control * Avoidance of marginal customer accounts * Cost minimization...
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...be successfully established in the global market. The central theory introduced in this article is developed based on a comprehensive framework of the entry modes choices. These modes of choices would determine the success factor of the international business strategy, and to choose these choices there are several important factors to be considered. These factors include situational firm factors, foreign environment review, and moderating factors that would directly influence the firm’s desired mode of choice. Referring to Appendix A is the mode choice of framework by Driscoll that depicts the whole concept discussed. To briefly illustrate, the firm would need to evaluate the two situational factors that would directly affect its desired level of different modes of characteristics. Subsequent from the selected desired modes, the firm would also need to determine the potential moderating influences, which would affect the desired mode. Thus, reassessment based on the moderators would take place to determine the most effective modes of entry. By selecting the right mode of entry, the firm would incorporate an effective business strategy for its international business plans. The article written by Driscoll is set to present an argument for the development of a comprehensive framework for understanding the mode of entry choices. In the article, she illustrated about the different modes of entry to international markets, analyzed on the different characteristics of the entry...
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...Man 4633 ASSIGNMENT 3 1.Define arbitrage factor costs Arbitrage factor costs are costs that an MNE incurs when there is the inability for a firm to encourage for issues to be resolved without the need of arbitration. When arbitration is needed, a firm loses precious time and possibly funds to be able to settle a dispute among the different business units with a conflict. This may result in the loss of competitive advantage and/or the loss of actual funds. 2. “Today’s challenge is to build transnational organizations that can sense an emerging consumer trend in one country, link it to a new technology or capability it has in another, develop a creative new product or service in a third, then diffuse that innovation rapidly around the world”. With this in mind, identify a company who has demonstrated this ability including a brief description of each step they took. Boeing is a perfect example of a company that was able to link technology and capabilities from national suppliers which they call “partners”, and to decentralize their manufacturing functionality to develop the new 747 dreamliner. Boeing first began by identifying key geographical “partners” that had the resources and functional capability to manufacture specific sections of the airplane. After doing so, they decentralized their manufacturing capability and handed the responsibility to these “partners”. Finally, what Boeing was left with was a strategically dispersed manufacturing plant across the globe...
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...Puma is one of the key sportswear firms globally that is involved in segments like sports clothing, footwear, and lifestyle products, where its core capabilities are in the field of manufacturing, designing, marketing and distribution of its products. The company has evolved over number of years to become € 2,738.8 million turnover firm in 2008 (FAME, 2009), however its roots can be traced back to the modest beginnings in the firm Gebruder Dassler Schuhfabrik by Rudi and Adi Dassler created in 1924, which later split into Puma and Adidas in 1948 (Keynote, 2009). Porter’s Five Forces: Porter’s five forces have been identified as the key competitive forces that define industry structure that is relevant to the business of the firm and therefore is highlighted as micro business environment analysis of the firm (Lynch, 2003). The implementation of the tool has been undertaken for Puma as follows: • Bargaining Power of Suppliers is low as Puma is one of the vertically integrated firms therefore making its own departments suppliers and distributors of its products, while raw material producers offer low differentiation therefore also have very low bargaining power. • Bargaining Power of Buyers is medium to high as there are low switching costs between different brands therefore allowing opportunity to customers to try different firms for their wardrobe. However, the strong product portfolio and the price mix of Puma means that it enjoys a degree of customer loyalty which...
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...In a market which works properly, the unit which is most cost-competitive will produce as much as it can in the limit of its capacity and if the capacity is lower than total demand on the market. The second most cost-competitive unit will do the same so long as the addition of its capacity and the first unit’s capacity isn’t sufficient to meet total demand. This will continue until total demand is satisfied. The units whose production costs are higher and which are not needed to meet total demand will either be idle or shut down (or not built if they don’t exist). Take the instance of the paper industry. We assume total demand for paper will be equal to 75,000 tonnes. There are three firms interested by this market: Alpha, Bravo and Romeo. Each one has production units whose costs per tweety and whose capacity are illustrated in the table below. Firm Production Unit Cost per tonne Capacity Alpha Alpha 1 700 40,000 Alpha 2 850 25,000 Bravo Bravo 1 750 25,000 Bravo 2 1200 100,000 Romeo Romeo 1 1000 10,000 1. Which units will produce in this market? Be precise and illustrate with a drawing. 2. What will be the market price for the tonne of paper? Show graphically the profits that each unit (Alpha 1, Alpha 2, Bravo 1, ...) will be making. 3. Bravo is wondering if it should increase the capacity of Bravo 1. What would be the consequences of such a decision? Illustrate this with a new drawing. 4. Alpha is reconsidering its position on the market and its...
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...alue. A firms resources and capabilities should add value by allowing the firm to exploit and mitigate its S&W’s. Likewise, adding value as to a firms resources and capabilities will lead to competitive advantage, providing your firm exploits these value added attributes. Taking the example of IP (above) so long as the competition cannot copy your value added or imitate it, your firm will have a Competitive Advantage. But in today’s world sustainable Competitive Advantage is not possible. So yes, a competitor may well innovate something that reduces your value added. For example, in Oct 2001 Apple’s Steve Jobs, launched the iPod, and it could store up to 5000 songs. The MP3 player and its imitators were now, not as valuable. Rareness. If similar firms control similar valuable resources and capabilities, then they are not rare. The smartphone was rare when introduced by Apple and so it was valuable and rare. Samsung launched the Galaxy, as well as Lenovo and others, it quickly imitated the iPhone, and so the smartphone does not have rarity for either, or any company today. This does not mean that common or similar resources and capabilities are not useful, they may well be if your firm deploys them and exploits them better than the competition. Ryanair and Southwest have valuable aircraft the same as any other flyer, but their Competitive Advantage comes from how they deploy and use these aircraft with no frills operating costs and pay as you go additional resources. Imitability...
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