Strategies for Competitive Advantage

In: Business and Management

Submitted By gregds198
Words 416
Pages 2
Strategies for Competitive Advantage: 1) Competing on Differentiation: staying ahead of the competition and providing uniqueness; limited only by imagination and can be applied to every aspect of the firm; should influence the value the customers derive from it 2) Competing on Cost: provides maximum value as perceived by the customer. Doesn’t imply low value; low cost leadership achieves the maximum value 3) Competing on Response: flexible, reliable, quick response; entire range of values related to timely product development and delivering and reliable schedule and flexible performance; flexible=making market changes, reliable=meeting schedules, timeliness=quickness in design, production and delivery Ten OM Decisions: degree of it depends o whether it is a good or service; differentiation, low cost and response can be achieved when managers: Goods and Services Design: determines the lower limits of cost and upper limits of quality Quality: what is expected by customers Process and Capacity Design: Location Selection Layout Design: material flows, capacity needs, personnel level, technology decisions, and inventory regulation HR and Job Design: determining job; very expensive and must match skill Supply Chain Management: determines what is to be made and what is to be purchased; mutual trust between buyer and purchaser is required Inventory: Scheduling 10.Maintenance: decisions regarding reliability and stability Global Operations Strategy Options: International Strategies: uses exports and licenses to penetrate global market; least advantageous with little local responsiveness and cost advantage; often easiest approach; requires little change in operation and little risk Multidomestic Strategy: are typically franchises, joint ventures or subsidiaries with substantial…...

Similar Documents

Competitive Advantage

...Essay by Mashell Chapeyama University of the People Competitive advantages of Chipinge Banana Company A competitive advantage refers to any asset or capabilities that a company has that gives value to it or its products and services, which competitors do not have. Competitive advantage creates cost leadership to a firm or enables the firm to produce differentiated products. An example of a competitive advantage is being able to sell the products at low price but still be able to get some profits. This essay explores the competitive advantages which Chipinge Banana Company has. Chipinge Banana Company is a company that is found in Zimbabwe. The company produces bananas only. The bananas are sold to customers in the country and abroad. This company is located in the region where there is abundance of rainfall as well as good soils. One competitive advantage of Chipinge Banana Company is the natural resources it has. Firstly, the company is located in a region with a lot of rainfall. This enables the storage of water in some dams. Most parts of Zimbabwe have got very low rainfall. The land there is also very flat, unlike most parts of the country, where there is ample rainfall, which are mountainous. The flat terrain makes it possible for the use of modern technology in banana farming. At this company, there is usage of overhead cable tractors. This makes it easier and cheaper to harvest bananas. Therefore, the cost of production of bananas is very low, as compared to......

Words: 2034 - Pages: 9

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

Competitive Advantage

...Event “Competitive Advantage” 15 September 2013 The term competitive advantage is the ability gained through attributes and resources to perform at a higher level than others in the same industry or market (Chacarbaghi and Lynch 1999, p. 45). There has been quite a bit of study and research interest due to existing issues regarding superior performance levels of businesses in the present competitive market conditions. "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). Firms that have a competitive edge over their rivals thrive in the marketplace and can exist for a very long time. Public companies in this category can have substantial returns for investors because they are able to capitalize on their competitive advantage. If one or more competitors can copy their ideas or make better products, then the company that had the competitive edge loses that advantage quickly. A prime example is Apple iPhones, in the cell phone manufacturing industry, U.S.-based Apple Inc. was on top of the world last year due to the astounding popularity of its iPhones and other products. Investors couldn't get enough of Apple's stock, pushing it well over $700 per share late last year. Investors were absorbed by the media and Wall Street’s glamorization that they seemed to fail to realize that Apple’s competitive......

Words: 731 - 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

The Advantages Competitive Strategies

...The Advantages of Competitive Strategies Abstract This paper will look at Competitive Strategies as they are described by Michael Porter. It will define and describe how Competitive Strategies create a competitive advantage. The Advantages of Competitive Strategies According to Michael Porter, an organization preparing to enter the market place must have in its core competencies the ability to create a competitive advantage (Robbins & Coulter, 2009). Yet, if an organization is to remain a viable entity throughout the turbulent terrain that accompanies the ever evolving market place, it will not suffice for an organization to just create or have a competitive advantage; the organization must be able to maintain a “long-term, sustainable competitive advantage” (Robbins & Coulter, 2009, p. 171). An organization can obtain this goal by discovering the niche that gives them a “distinctive edge” (Robbins & Coulter, 2009, p. 170). Robbins and Coulter noted in their 2009 work, that an organization’s “distinctive edge comes from the organizations core competencies because the organization does something that others cannot do or does it better than others can do it.” Once this distinctive edge is established, the organization now has a competitive advantage, “which is what sets an organization apart” (Robbins & Coulter, 2009, p. 170). An organization can gain a competitive advantage by providing its customers with some level of convenience. “Southwest......

Words: 564 - Pages: 3

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 Paper Christopher Crehan, Sarah Franzen, Nicole Hadad, Kimberly Scott, and Leeza Steindorf MGT/ 498 April 26, 2014 Cheryl Boehm Competitive Advantages Paper Among large corporations there are many similar competitive advantages and they often share the same thought process on which competitive strategies will best result in long-term organizational performance. With that being said, this paper will discuss Riordan’s competitive advantages in association to some other major corporations, the competitive strategies that may help to increase the innovation and sustainability of their operations, how these strategies will affect the long-term performance of the business, and what global consideration should be taken into account for their business strategy. Coca Cola, Starbucks and Riordian have a number of competitive advantages in common, with the most significant as market leaders, having a strong brand, having a focus on corporate climate, and focusing on a product or product group. Other areas of strengths are being leaders in their field: Coca Cola as a giant in the beverage industry, Starbucks masters the art of producing, brewing, and serving high quality coffee in an upscale environment, and Riordian dominates in the plastics industry by using plastic injection molding for their containers, producing medical equipment parts, and the various fans and parts they produce. Another competitive advantage that these companies possess is......

Words: 902 - 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 and Corporate Strategy

...SUMMARY: FROM COMPETITIVE ADVANTAGE TO CORPORATE STRATEGY: 1. Passing the Essential Tests a) How Attractive Is the Industry? An attractive industry with a high ROI will be difficult to enter because entry barriers are high, suppliers and buyers have only modest bargaining power, substitute products or services are few, and the rivalry among competitors is stable. An unattractive industry like steel has flaws i.e. many substitute materials, powerful and price-sensitive buyers and excessive rivalry that may be state supported. b) What Is the Cost of Entry? Diversification cannot build shareholder value if the cost of entry into a new business eats up its expected returns. A company can enter new industries by acquisition or start-up. The more attractive a new industry, the more expensive it is to get into. c) Will the Business Be Better Off? A corporation must bring a competitive advantage to the new unit, or the new unit must offer potential. When the benefit to the new unit comes only once, the parent company has no reason to keep the new unit over the long term. Once the results of the one-time improvement are clear and the diversified company no longer adds value, sell the unit and free up corporate resources. 2. Four Concepts of Corporate Strategy – (a) Portfolio Management: Is based primarily on diversification through acquisition. The corporation acquires sound, attractive companies with competent managers who agree to stay on. The acquired units are......

Words: 1232 - Pages: 5

Building Competitive Advantage Through Business-Level Strategy

...Chapter # 5 Building Competitive Advantage Through Business-Level Strategy Business Level Strategy Is the objective of developing a firm specific business model that will allow a company to gain a competitive advantage over its rivals in a market or industry. The way that strategic managers define their company’s business is the first step in crafting business level strategy. Customer Needs and Product Differentiation Customer needs are desired, wants or cravings that can be satisfied by means of the attributes or characteristics of a product a good or service. Two factors determine which product a customer chooses to satisfy these needs: The price of the product and the way a product is diffetentiated from other products of its type. Product differentiation is the process of designing products to satisfy customers needs. A company obtains a competitive advantage when it creates, designs, and supplies a product in a way that better satisfies customer needs than its rivals do and chooses the correct pricing option the one that results in the level of demand that optimizes profitability. Customer Groups and Market Segmentation Market Segmentation is the way a company decides to group customers, based on important differences in their needs or preferences, in order to gain a competitive advantage. One principal way of grouping customers and segmenting the market is by what customers are able and willing to pay for a particular product, the other principal method of......

Words: 1262 - Pages: 6

The Impact on Competitive Advantage (Strategies)

...The impact on competitive advantage on McDonalds One of the competitive advantages is the strategy used in a company. In McDonalds Company, the strategies can be divided into several parts which are the strategies of competitors, globalization, health issues and how McDonalds overcome them, respect towards cultural differences among every different countries, and they put a strong focus on children. There are many international fast food franchises such as Burger King, KFC, Subway and etc. However, McDonalds are one of the international fast food and they are struggling that the consumers start to switch to their competitors in the year of 2002 (Han, 2008). It is because most of their competitors put a strong emphasis on offering healthier, hotter and higher quality of food yet cheaper. In this case, McDonalds used the strategy of adapting environmental change, that they start promoting healthier and affordable prices to satisfy the customer’s demands. Besides that, McDonalds also faces the impact of health issue. Some claims that McDonalds provide oily and unhealthy food that will lead a person to become an obese. However, McDonalds came out with the strategy of changing their menu to by adding salads and other lighter options into the menu. Other than that, McDonalds serve McGriddles sandwiches for breakfast in United States and Canada. Furthermore, they provide the customers to access the internet with the technology of wireless platform. This strategy of McDonalds......

Words: 866 - 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

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

Competitive Advantage

...Competitive Advantage and Pro Sports LaChandra Nicole Gaines MGMT 488 June 5, 2011 Ronald Morritt Competitive Advantage and Pro Sports Sustainable competitive advantage is the main purpose of an organization’s corporate strategy. Sustainable Advantage permits the preservation and development of a company’s competitive location within market (Strategy Fundamental: Determining Sustainable Competitive Advantage, 2010). Competitive advantage facilitates an organization to outlast against its competitors for an insignificant amount of time. Competitive advantage may originate in many forms. The competitive characteristic stems from the likeness of other alternatives (Strategy Fundamental: Determining Sustainable Competitive Advantage, 2010). I chose the Miami Heat as my pro-sport team to discuss competitive advantage. Because signing the very talented LeBron James to its 2010-2011 rosters, the Miami Heat established competitive advantage over all other professional basketball teams in the league (Waller, 2011). Alongside Dewayne Wade, the Miami Heat has the potential to bring home another championship to the city of Miami. There is a unanimous conformity that both Dewayne Wade and LeBron James are two of the best players in the NBA (Waller, 2011). The talents of James and Wade can dominate any team to secure a win for by making all the shots, rebounds, and playing aggressive defense. Both James and Wade signify sustainable competitive advantage for the reason that...

Words: 574 - Pages: 3