What are the two types of core competencies that drive a firm’s competitive advantage? Which firms demonstrate a clear competitive advantage because of (a) major value-creating skills/core capabilities and/or (b) superior assets or resources? Which firms have demonstrated sustainable sources of competitive advantage? The two core competencies that drive a firm’s competitive advantage are cost leadership and differentiation. A firm that utilized cost leadership is Costco.
These strategies involve a variety of different combinations of using resources, scientific and technical skills; forming alliances; licensing innovations; attempts technology and market forecasting; and attempts to develop a variety of new products and processes on their own. (Freeman & Soete, 1997) This article focuses on some of the theoretical approaches that suggest resources and capabilities as their sources of competitive advantage and that firms will develop its resources or capabilities to achieve competitive advantage. This article also looks into two practical examples of companies from different sectors, providing some evidence of the application of theoretical concepts with development of resources or capabilities, and eventually achieving competitive
Before adapting any approaches, the corporation must determine if the advantages of venturing into the new market outweigh the costs it will incur. The corporation has to choose if it will adapt its business model to developing countries while keeping its primary value propositions constant. It can also change the contexts of its business model or avoid the emerging market altogether. If a company chooses to adapt to the emerging market, it must fill the voids in the product markets (Khanna and Krishna 73). For example, Dell manufactures a wide variety of computers that are configured to the customers' requests.
Thus, they become more competitive and the ones with best processes win market sectors. In this case the competitors react more aggressively and they introduce new IT innovations, instead of imitating the first mover. Competitors compete by introducing new innovations and attracting customers so that they begin to switch from one to another. Therefore they are responding to changing environment. Industry rivalry brings intense and dynamic movements in the market.
These five forces shape industry so the forces will be intense if the companies are comparable and will not be able to gain the attractive return on the investment while there will be a good profit for the company if these forces of the company not posing any serious threat like “Coke”. An industry’s formation is more about what makes profit for the specific industry and it helps to achieve the completive advantage. The analysis of an industry is a very important step in order to make a good strategic positioning and the main step for any industry is to align these strategies with the company’s competitive forces because the industry structure in the long run is helpful in gaining profitability. In this article, the profit structure of an industry
We focus on those characteristics which affect the nature of competition and pricing – but it is important not to place too much emphasis simply on the market share of the existing firms in an industry. Traditionally, the most important features of market structure are: The number of firms (including the scale and extent of foreign competition) The market share of the largest firms (measured by the concentration ratio – see below) The nature of costs (including the potential for firms to exploit economies of scale and also the presence of sunk costs which affects market contestability in the long term) The degree to which the industry is vertically integrated - vertical integration explains the process by which different stages in production and distribution of a product are under the ownership and control of a single enterprise. A good example of vertical integration is the oil industry, where the major oil companies own the rights to extract from oilfields, they run a fleet of tankers, operate refineries and have control of sales at their own filling stations. The extent of product differentiation (which affects cross-price elasticity of
Hence to successfully compete, survive and flourish, an enterprise has to pursue an expansion strategy. There are following advantages and requirements for adopting the same: • It is adopted to gain a significant growth as compared to incremental growth envisaged in stability strategies. • It is also adopted to increase the rate of growth of sales, profits and shares by entering new markets, acquiring new resources, developing new technologies and creating new managerial capabilities. • It also provides a blueprint to the business eneterprise to achieve their long term growth objectives. • It allows the companies to maintain their competitive edge even in advanced stages of product and market
The adoption of new technologies and trends is being facilitated in the industry for the competition and the customer’s overall experience. Many suppliers that are having similar strategies face a strong competition. The barriers for exiting the markets are high. Products and services of are undifferentiated leading the customer to focus on the prices offered. Low market growth, so it can be increased only by taking another firm’s market share.
Assignment # 1 Task 1: Introduction: Competitive advantage is obtained by the development of a set of attributes by an organization to outperform its competitors. For almost half a century the development of theories helping in competitive advantage have gained the attention of management community. Objective: This research gives an overview of the key theories for the long life span from 1960’s to mid of 2013. In the early period there were only two main theories of competitive advantage i-e market-based view and resource-based view but later on the knowledge-based view and capability based-view of strategy was also derived from resource-based theory. Similarly, the relational-based and transient advantage theory has also received some
The five forces are divided into two dimensions, the horizontal and vertical forces. Horizontal forces are threat of substitutes, threat of new entrants, competitive rivalry and vertical forces are bargaining power of buyers and bargaining power of customers (Martin, 2014). By understanding which forces are most powerful, the theory can also be used to identify areas of strength, to improve weaknesses and to avoid mistakes. According to the Entrepreneurial Insights magazine, a business may enter new markets in several ways. If a company is taking over an existing firm, from outside the industry, bringing along innovation and expertise, it may change the competitive dynamics in the existing market.