Competitive advantage of a firm is the edge that it has over its competitors (Altharti 2012).It is important to state that competitive advantage (CA) cannot be achieved without a business strategy or business model. It is the business strategy, which is the management game plan for creating value for stakeholders and earning a reasonable return on investment that gives a company a competitive advantage over rivals in terms of higher financial performance on revenue, return on investment etc. The author accepts that Porter’s generic strategy and value chain are important tools in understanding the competitive strategies being deployed by rivals in any industry analysis. An understanding of the generic strategies such as the broad low cost provider, broad differentiation strategy, and narrow focus strategies on cost and differentiation being deployed by competitors can provide opportunities for existing and potential competitors by trying to achieve a lower cost or better differentiation by rivals. The value chain is an internal analysis of how an organization organizes
The pricing strategy or pricing policy is one of the most important managers make for a product as it affects the profitable outcome and competitiveness that a product may make. (Toni, 2017). A business can use a variety of pricing strategies when selling a product or service. The price can be set to maximize profitability for each unit sold or from the market overall. It can also be used to defend an existing market from new entrants, to increase market share within a market or to enter a new market by dropping the price or offering more benefits with the device such as packages.
It notes that stiff competition can reduce the potential profit of like companies. Firms must determine the strategy that will be utilized to gain and maintain the upper hand in the industry, as it relates to price, marketing, competition and the introduction of new and innovative products into the market. The more a company senses competition the intensity of its strategy may increase as it does not only respond to other firms, but also to the industry as a whole. It is natural for firms to respond to competitive moves made by its rival as it will have an effect albeit positive or negative on the industry. Firms may be forced to supply the demands for cheaper but more reliable products or to create differentiated products to maintain the competitive
To do this it needs to have a competitive advantage over its its rivals. A competitive advantage is something a company does better than its rivals that gives it an advantage over its rival. Porter (1988) states that a firm performs many activities that can contribute to a firms relative cost position and create a basis for differentiation which can create a cost advantage that gives a firm a competitive advantage over its competitors. A company’s competitive advantage and competitive strategy are both interrelated. Competitive strategy is defined by Porter (1980) as a broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals.
The competitive advantage of these companies and their permanence in the market lies: in their ability to respond to imbalanced resources existent between different countries and, on the ability to create markets were their previously didn’t exist. This sustained competitive advantage depends on three factors. First, on their ability to identify and act (sometimes through high tariffs) to emerging opportunities before the competitors reduce the profits in markets in which these were installed previously. Second, on the knowledge of markets and suppliers, and ultimately on their ability to attract and maintain a loyal network of business partners (Oviatt and McDougall 1994). The second group of Geographically Focused Start-Ups is composed of start-ups focused on a specific region.
IPO underpricing: Determinants of first-day IPO returns for Emerging growth firms in US Introduction It has been widely recognized that the presence of emerging growth firms is crucial to an economy. These firms not only kindle competition, innovation and knowledge spillover in the economy but also create jobs and are more likely to offer better salary and benefits. They also tend to generate more value and profits but are less prone to failure compared with small businesses. In addition, they are more likely to export products and services while producing higher productivity due to investment in research and development. (Coopers and Lybrand, 1988) In the case of the United States, the rise of these companies claimed America’s economic
There are many things that make some countries consistently seek for improvements and capable of consistent innovation, Innovation is important for companies in order to achieve competitive advantage and to sustain this competitive advantage it needs to be followed with consistent improvements. Porter had made a framework to understand the competitiveness of nations and address why certain companies are always looking for more sophisticated source of competitive advantage. As porter stated a nation gain competitive advantage if its firms are competitive, a company become competitive through innovation and improvements. The Framework consist of four attributes that, they together form porter diamond of national advantage model, these attributes are: Factor condition, Demand condition, Related and supporting industries, and Strategy, structure and rivalry. These factors create the national environment where organizations compete.
In theory, increased competition means more products on the shelves and lower prices. FTA has numerous advantages and disadvantages, now I will tell about advantages of FTA. As a first, it can increase production for both countries. The purpose of trade is to provide access to a greater variety of goods
Relating and supporting industries, if suppliers or related industries exist in the home countries that are themselves internationally competitive, this can result in competitive advantage in the new industry, firm strategy, structure, and rivalry. Different nations are characterized by different management ideologies, which can either help or hurt them in building competitive advantage. If there is a strong domestic rivalry, it helps to create improved efficiency, making those firms better international competitors. Porter also notes that chance (such as new breakthrough innovations) and government policies (such as regulation, investments in education, etc.) can influence
in distribution activities, companies often caught in a dilemma: on the one hand, the increasingly fierce market competition requires enterprises to continuously improve the quality of their delivery service; but on the other hand, the improvement of the quality of delivery service will inevitably lead to higher distribution costs. Quality and cost of the distribution services form a contradiction. The improvement of the quality of service can enhance the corporate image and reputation, and increase corporate profits. But improve the distribution costs will also reduce profits. This is "The Reversal" phenomenon in distribution.