Competitive Advantage Theory Essay
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
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A firm strategic position is defined by well performance of its similar activities to other rivals. So its performance can be evaluated in an industry where these organizations compete. Organizations make their assessment of external environment and competitive advantage to formulate strategy. Basically there are three major sources of market view theory for better performance. They are monopoly, barriers to entry and bargaining power. If a firm is in monopoly and there are barriers for the new competitors to enter in the industry and it has a strong bargaining power with its customers and suppliers means better performance, so a strong firm. Later on, the strategic management study changes from external assessment to internal assessment of a firm with its resources and …show more content…
There are four relational resources of competitive advantage including relation specific assets, knowledge sharing routines, complementary resources/capabilities and effective governance. MBV suggest that bargaining power is the primary source of high returns in market while according to RBV the primary source is the set of different resources, their capabilities and knowledge of the firm. While according to relational view these are some shared knowledge and complementary resources of the network. In MBV the Profit preservation mechanism is market barriers to entry, while in RBV it is firm level barriers while in relational view they are dyadic/network
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