Strategic Competitive Advantage

In: Business and Management

Submitted By aj000369
Words 1714
Pages 7
Strategy & International Business

Introduction There has been a rapid modification in the business environment in the past decade as a result of privatization and globalization leading to difference in company’s strategies. A strategy can be defined in many ways and has many different viewpoints. This article aims to explain and critically evaluate the approaches of Jay Barney and Michael E. Porter, two leading strategy theorists, in-turn explaining the basis leading to the difference. 
 What is Strategy & Competitive Advantage? Strategy is the creation of unique and valuable position involving a different set of activities.1

A firm is said to have competitive advantage when it is implementing a strategy which is not is being implemented by it’s current or potential competitors and also sustains profits that exceed the average for it’s industry.


Is Competitive Advantage enough? The goal of much of business strategy is to achieve a sustainable competitive advantage which is the same as competitive advantage but the advantages of the strategy cannot be duplicated by the competitors. (Barney, 1989). Different authors have different viewpoint in regard to sustainable competitive advantage. A sustained competitive advantage is simply a competitive advantage that lasts for a longer period of calendar time (Porter, 1985). A competitive advantage is sustained only after the efforts to duplicate the advantages of the strategy have been ceased (Lippman and Rumelt,1982).


Michael Porter’s Viewpoint Sustainable competitive advantage is when a strategy is implemented and the same strategy is not being implemented by the current or potential competitor and that advantage lasts for a longer period of time. For example, BIC, the pen manufacturing company, has over the years manufactured and sold narrow line of standard and economical pens to virtually all the…...

Similar Documents

Competitive Advantage

...Competitive Advantage Paper Name University of Phoenix MGT/498 Strategic Management Instructor Date Competitive Advantage Paper Riordan Manufacturing Incorporated engages in plastic injection molding with operations both in the United States and China. As an industry leader, Riordan is in the process of identifying strategic factors in the internal and external environment. The goal is to develop long-range plans to manage resources as well as the opportunities and threats present in the environment. Emerging markets of Asia, some in South America, and in Europe expects to bring in demand for more products. These markets deeply affected by lifestyle changes ushered in by the new age of multimedia, economic growth, industrialization, and growth of personal income will power the expected growth for plastics and other consumer products. Competitive Advantages and Strategies Riordan is a company with business across the globe. Similar to companies like McDonald’s and The Gap, Riordan receives a great deal of pressure to maintain technological perks to the customer, treat the employees well, and support efforts to enforce the protection of the environment. As a global company, special interest groups sometimes have a louder voice than the public; these groups will request, almost demand, the support of the business within the community. For Riordan to remain competitive the company has been very supportive of special interest groups to...

Words: 1318 - Pages: 6

The Relations Between Competitive Advantage and Strategic Performance

...Mangers and organizations must perform effectively to gain and sustain a competitive position in the market place, using one of the five essential types of performance, cost, quality, speed, innovation, and service. These five performance dimensions, when managed well, deliver value to the customer and provide competitive advantage to you and your organization. (the fundamental success drivers)( the sources of competitive advantage) Innovation: Is the introduction of new goods and services. Firms must innovate or it will die. 1. Firms must adapt quickly to changes in consumer demands and to new competitors. 2. Products don’t sell forever. 3. Firms have to be ready with new ways to communicate with customers and deliver the products to them. For example, restaurants in the black. Philips adapted quickly to changes in consumer demands, from light bulbs to X- ray machines, recorded albums and then semiconductors(microchips) and medical equipment and LED- based lightening systems. Quality: Is the excellence of your product( goods or services). The traditional approach was to check work after it was completed and then eliminate defects. Using inspection and statistical data to determine whether products were up to standards. But now there is a new approach includes 1. Preventing defects before they occur. 2. Achieving zero defects in manufacturing. 3. Designing products for quality. 4. Customization like Starbucks. De caffeine coffee. The goal is to solve and......

Words: 564 - Pages: 3

Competitive Advantage

...Call it strategic intent. Whatever it is, a firm needs such a rationale to justify its existence. And that rationale, we believe, is to create value and win. To create value better than rivals can; to contribute to the society in ways that are unique and indispensable. That, in the end, is what winning in business is really about. Just look at pioneering firms like GE, Ford, and Microsoft, which have in this century changed and shaped the way we live, work, and play; or look at winning firms like Proctor & Gamble, Coca-Cola, or Merck that so many people find their daily lives depend on. If the economics, the environment, or our abilities determine that we can’t get there, we must take the same spirited action to disengage ourselves from that which we can’t make better than the best (Jack Welch, CEO, General Electric). For great business firms, winning is not a one time or now and then thing. Winning is a habit. To be a winner, a firm has to create, exploit, and sustain its competitive advantages vis-à-vis rivals. And it has to do so consistently if it wants to be a perennial winner. Where do competitive advantages come from? What are their contents and effects? Where do they reside inside or outside the firm? In what form can we observe them? How sustainable are they? These are all important questions concerning the multiple facets of the anatomy of competitive advantage. Competitive advantage comes in various shapes and sizes. Understanding the anatomy of competitive......

Words: 1099 - Pages: 5

Competitive Advantage

...Competitive Advantage: Question 1/2: A competitive advantage is a position that a firm occupies in its competitive landscape. Cost advantage Cost advantage A firm possesses a sustainable competitive advantage when it has value-creating processes and positions that cannot be duplicated or imitated by others, that lead to the production of above normal rents, in that it provides a long-term advantage that is not easily replicated. Sources of competitive advantage: Competitive advantage Competitive advantage Similar products at lower price Differentiation advantage Differentiation advantage Price premium from unique products Competitors’ gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The strategies relate to the extent to which the scope of a business' activities are narrow versus broad and the extent to which a business seeks to differentiate its products. Question 3: The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. Cost leadership With this strategy, the objective is to become the lowest-cost producer in the industry. The traditional method......

Words: 1626 - Pages: 7

Developing Competitive Advantages&Strategic Focus

...then is to help the marketing manager make the transition from a broad understanding of the marketing environment to the development of a strategic focus for the firm’s marketing efforts. Strengths and Weaknesses: Strengths are meaningful only when they serve to satisfy a customer need: that strength becomes a capability. The manager can develop strategies to overcome the firm’s weaknesses or find ways to minimize the negative effects of these weaknesses. Opportunities and Threats: Should not be ignored as the firm gets caught up in developing strengths and capabilities for fear of creating and efficient but ineffective organization. The SWOT Matrix allows the marketing manager to visualize the analysis. For doing this matrix, the manager should, at first, quantify the magnitude of each element within the matrix. Magnitude refers to how strongly each element affects the firm. The second step is to rate the importance of each element using a scale (1 to 3) for all the elements. Then, the final step is to multiply the Magnitude by the importance ratings to create a total rating for each element (MxI=R). Those elements with the highest total ratings should have the greatest influence in developing the marketing strategy. Establishing a Strategic Focus: The SWOT analysis is a guide. They are 4 general directions for its strategic efforts: Aggressive (Many internal S/many external O); Diversification (many internal S/Many external T); Turnaround (many internal......

Words: 748 - Pages: 3

Competitive Advantage

...Competitive Advantages MGT/498 - Strategic Management February 9, 2014 Competitive Advantages Paper Economy today is highly competitive; increasingly competitive as more companies acknowledge that domestic landscape is shrinking. As the opportunities decrease in the domestic market, organizations are making the changes to gain a competitive advantage in the global market. In this paper, team B will discuss the advantages of Riordan Manufacturing and how there related to other organizations in the market, such as Starbucks, and Apple Inc. In addition to determining the competitive strategies of Riordan, they must improve innovation and sustainability in their business operations of both the United States and global market. Furthermore, Riordan has to establish particular strategies and determine the numerous ways in which they will accomplish sustainability of long-term organizational performance. Competitive Advantages The company Riordan has the competitive advantage of product differentiation because their producing computer fans, heart valve stems, and injected molded products, such as water bottles, etc. Their competitive advantage caters to any retail household store, office buildings, and even medical centers. Furthermore, Riordan has several locations, which can be used to implement production efficiencies, which lower costs. To identify opportunities, the organization holds a comprehension market study to gain knowledge and establish directional......

Words: 920 - Pages: 4

Competitive Advantages

...Competitive Advantages Riordan Manufacturing, Inc. is a corporation that focuses on the manufacturing of fans, plastic bottles, and plastic injection molding. Over the years Riordan Manufacturing Inc. has managed to expand its business into several cities and also around the world. A company who has a similar background is IKEA. IKEA has expanded its business to around the world branding itself as a household name. One way IKEA has a better competitive advantage over Riordan Manufacturing Inc. is the cost leadership strategy. IKEA has managed to sustain its operation by creating a product that is unique and which appeals to the masses but yet it is very cost effective to the consumers. Riordan Manufacturing has been able to stay in business due to the differentiation strategy but it could continue to grow globally and ensure its long term success by focuses on how it can reduce costs and pass that savings to the end users. IKEA has also used the cost focus strategy which has propelled its popularity and success globally. Using this method, IKEA has been able to identify a certain need in specific areas of the world and designed its furniture according to the style preference of that area while still keeping costs low and providing the savings to the end user. Riordan Manufacturing, Inc. could use this strategy to expand its products or manufacturing capabilities to specific groups of clientele around the world and beat out the competition cost wise. ......

Words: 303 - Pages: 2

Competitive Advantages

...Introduction In the competitive world of manufacturing, supply and demand, one company is standing out and making its presence known, Riordan Manufacturing Incorporated. This company is at a key point on whether to continue to expand further in the global market or continue current operations in the status quo and risk being out competed by rival companies. The following is an explanation will show that the company is in need to expand to further markets but why it has the management strategy and tools to expand. Common Competitive Advantages Riordan Manufacturing Company is the most popular plastics manufacturer not only in the United States but in the global market. The company strives to be the best company in the world. The company is owned by Riordan industries, a fortune 100 enterprise that focuses on proving solutions to their customer’s challenges. Riordan manufacturing company operates similar to companies like McDonald’s, the leader of the fast food chain and other leading companies because they all focus on change. They will strive to be a solution provider for their customers and not be part of the problem. The competitive strategies are they focus on the long term relationships with its customers to ensure them quality products, innovative solutions, and for the products to be sold at reasonable pricing. Riordan Manufacturing will have to continue to focus on its customers and their needs, come up with different strategies to focus on the competitive......

Words: 968 - Pages: 4

Competitive Advantage

...CONCEPT OF COMPETITIVE ADVANTAGE IS CENTRAL TO THE STUDY OF STRATEGIC MANAGEMENT, AND EXAMINE THE USE OF PORTER’S GENERIC STRATEGEIS BY COMPANIES TO COMPETE. KEY TERMS Competitive advantage. This is the favourable position an organization seeks in order to be more profitable than its competitors. Strategic management. It is the systematic analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for maintaining optimum management practices. The objective of strategic management is to achieve better alignment of corporate policies and strategic priorities. Porter’s generic strategies. These are three general types of strategies developed by Michael Porter that are commonly used by businesses to achieve and maintain competitive advantage. Company. It is a voluntary association formed and organized to carry on a business. Types of companies include sole proprietorship, partnership, limited liability, corporation, and public limited company. INTRODUCTION 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 they include; overall cost leadership, Differentiation and Focus. In order to create and sustain competitive advantage,......

Words: 3350 - Pages: 14

Competitive Advantages

...Competitive Advantages This paper will discuss the competitive advantages of Costco and Riordan Manufacturing. An analysis will be performed to expose which competitive advantages Riordan has in common with Costco. An estimate on which competitive strategies Riordan would use to improve innovation and sustainability of business operations domestically and internationally will be given. An explanation will also be presented to describe how the competitive strategies chosen may affect the sustainability of long-term performance and how the global market would affect the business strategy of Riordan. Like Costco, Riordan manufacturing generates greater sales and margin to optimize their investment. Riordan’s sales and product strategy has been proven effective through their pricing and product selection, which sustains their strategic goals and objectives. To retain their customers, they increase their sales through employee satisfaction. The exceptional customer service is implemented in order to satisfy their financial performance as part of their objective. This puts Riordan in the lead to achieve their goals and secure some of the largest accounts to increase their market. The value and the effectiveness of Riordan manufacturing is truly as effective using the SWOT analysis. They also exemplify ways to generate planned revenues with the delivery of their product, which in turn strengthens their competitive advantage. The structure of their plan is based on financial......

Words: 800 - Pages: 4

Competitive Advantages

...Competitive Advantages Trisha Sadler, Darryl Warren, Josephine Ives, Rebecca Smith, Beth Sexton MGT/498 May 19, 2014 Rolando Espiritu Competitive Advantages Competitive Advantages - Riordan Riordan is a plastic manufacturing company, which was started in 1991 (University of Phoenix [UOP], 2013). The company has locations in California, Michigan, Georgia, and China. The company’s business units are plastic parts manufacturing, plastic beverage containers, and the plastic fan facility. Riordan’s customers consist of beverage makers, medical supply firms, electronic supply firms, and pharmaceutical companies (UOP, 2013). A competitive advantage allows companies to increase sales, resources, and market share. Team B’s analysis will provide insight on Riordan’s competitive advantages by identifying competitive strategies, competitive sustainability, and the effect of the global market changes to the company’s business strategy. Riordan’s Competitive Advantages Every organization must establish some type of competitive advantage. The recent research of FedEx, Southwest, and McCain Foods’ competitive advantages assists in identifying Riordan’s competitive advantage. The first step in competitive advantage is creating a mission statement and developing a strategic plan. Firms that operate with a strategic plan develop focus and alignment. Introducing unique products or services leads to the establishment of a competitive advantage. In the case of FedEx, the core service...

Words: 1108 - Pages: 5

Competitive Advantage

...Running head: COMPETATIVE ADVANTAGE AND PRO SPORTS Competative Advantage and Pro Sports Cynthia Moreno University of Phoenix MGT 488 Ricky Lovitt Abstract Competitive advantage is defined as the strategic advantage one business entity has over its rival entities within its competitive industry. Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. “A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player” (Barney 1991 cited by Clulow et al.2003, p. 221). To gain competitive advantage a business strategy of a firm manipulates the various resources over which it has direct control and these resources have the ability to generate competitive advantage (Reed and Fillippi 1990 cited by Rijamampianina 2003, p. 362). There are two of competitive advantages: comparative advantage and differential advantage. We will address differential advantage in this paper and how it applies to the business of professional sports. A differential advantage is created when a firm's products or services differ from its competitors and are seen as better than a competitor's products by customers. Four criteria that determine a firm's competitive capabilities in the marketplace and judging a firm’s resources are as follows: 1. Are they Valuable? (do they enable a firm......

Words: 764 - Pages: 4

Competitive Advantage

...Competitive Advantage Introduction Why do you buy a cup of coffee in Starbucks? Why will you choose KFC for your lunch rather than other brands? The answer lies on the term competitive advantage. It becomes the main reason to build brand loyalty for customers. (Boundless 2015) Nowadays, most firms both in local and global markets all face a challenge for a marketing strategy is to find a way of achieving and sustain a competitive advantage compared with the other products and companies. The basic condition of competition has changed a lot and the speed of this tendency is increasing. And with the change of competitive environment, traditional competitive such as economical scale or advertisement expenditure cannot be such effectively as past time. What’s more, traditional management ideas are unlikely to lead a firm competing with other companies. Therefore, managers need to build a new managerial mind-set about competitive advantage. (Barney&Mackey 2005) This article will introduce the definition of competitive advantage in a market and emphasis the importance of it. It will also be presented two main strategies including cost strategy and differential strategy. And then some issues will be stated that organizations facing in trying to gain and maintain competitive advantage. Then it gives some reasons that why competitive advantage is still a significative concept at present. Body Definition of Competitive Advantage A competitive advantage means one firm has...

Words: 2158 - Pages: 9

“Strategic Planning as Competitive Advantage”

...Resumen del Paper “Strategic Planning as Competitive Advantage” Un total de 113 firmas respondieron la encuesta realizada siendo 68 de industria de muebles (SIC 2512) y 45 de la industria de indumentaria (SIC 2335). Entre los coeficientes de correlación que se tomaron en el estudio estaban el tamaño de la firma, la edad de la firma y el locus de control del CEO. Se cree que dependiendo del locus de control puede haber una relación positiva entre la planificación estratégica y los resultados de la planificación. La SIC 2512 se utilizó para probar la hipótesis H1 que es: H1: En industrias de “planificación en equilibrio”, la correlación entre la planificación estratégica y sus rendimientos no difiere significativamente de cero. La SIC 2335 se utilizó para probar la hipótesis H2 que es: H2: En industrias de “planificación en desequilibrio”, la correlación entre la planificación estratégica y sus rendimientos difiere de manera positiva y significativamente de cero. H3: La correlación entre la planeación estratégica y sus rendimientos es significativamente mayor en industrias de “planificación en desequilibrio” que en industrias de “planificación en equilibrio”. Como resultado del estudio estadístico se obtuvo la siguiente conclusión: existe una relación negativa entre las industrias de “planificación en equilibrio” y el rendimiento de la planificación. Esto significa que mientras más empresas en la industria construyan una planificación estratégica, la relación entre la......

Words: 398 - Pages: 2

Competitive Advantage

...Cost advantage/ Competing in distinctive way “If a company cannot be more operationally effective than its rivals, the only way to generate higher level of economic value is to gain a cost advantage or price premium by competing in a distinctive way”. Does this apply to the digital economy? Assess critically. It has been claimed that “value can be created with Internet communication either through finding ways of reducing costs or, on the demand side, by improving the match between buyer preferences and the goods they purchase”. Do you agree? “Internet technologies tend to reduce variable costs and tilt cost structure towards fixed cost, creating significant greater pressure for companies to engage in destructive price competition.” Do you agree? INTRODUCTION o It is argued that “If a company cannot be more operationally effective than its rivals, the only way to generate higher level of economic value is to gain a cost advantage or price premium by competing in a distinctive way”. o I will first give a definition of the digital economy and what is economic value. o This is followed by a briefly discussion on operational effectiveness. o I will then talk about the importance as well as limitation about cost advantage and price premium strategies. o The last part of the essay will look at other strategies and other elements besides cost advantage and price premium a firm can consider gaining competitive advantage. MAIN......

Words: 1498 - Pages: 6