1. Group Assignment – Porter 5 Forces.
Read the article ??Competitive Advantage or Flexibility’ also called ??The End of Competitive Advantage’.
Briefly describe the Theory of ??sustainable competitive advantage’.
Briefly describe the environment in which this theory would be effective.
Why does Rita Gunther McGrath believe that ??Companies are successful, McGrath wrote, because they are “exploiting temporary competitive advantages, not sustainable ones”’.
Briefly describe the environment in ??exploiting temporary competitive advantages, not sustainable ones’ would be effective.
How does the shortening of the ??strategy life cycle’ and the shortening of the ??product life cycle’ contribute to the change described by Rita Gunther McGrath.
Identify a company that has been successful by ??exploiting temporary competitive advantages’. Discuss the key factors contributing to this success. What strategy recommendations would you make for this company.
Sustainable competitive advantage refers to the act when an organization acquires the attribute or combination of characteristics that allow it to perform better than the competitors do. The characteristics could include highly trained or skilled workforce, availability of resources and proper exploitation of technology. Michael Porter proposed the sustainable competitive advantage theory in 1985. National strategies focus on productivity as the main idea for a business that needs to remain to be competitive. For instance, competitive advantage tries to correct low wage economies due to unfavorable terms of trade by maximizing the production scale of goods and services. It is a key determinant for companies that want to achieve the set goals and objectives.
Sustainable competitive advantage is experienced in all business organizations and mostly in the competitive environment. It is important in periods of hyperactive competition with short product cycles to enhance continuous improvement. Therefore, it is a theory that is aimed at dealing with the tough times in business. Michael E, Porter identified a model that identifies and analyzes five competitive forces that shape every business entity. It also helps in determining the strengths and weaknesses of a company. The competitive forces include competition in the industry, power of customers, potential of new entrants into the industry, competition in the industry, threat of substitute products and power of suppliers. These factors combined affect a company in its ability to serve customers making gains and this normally requires a business enterprise to re-assess the market due to changes in information relating to businesses.
Rita Gunther McGrath believes that companies are successful when they exploit competitive advantage rather than the sustainable ones. One of the merits is getting a better understanding of the competitors. A business entity must learn the emergence of new competitors and be informed on their strengths. It is also vital to evaluate the weaknesses and the opportunities created in the firm to utilize the gaps left. Another issue is identifying a company’s competitive advantages, which includes performing detailed evaluation of the company’s own weaknesses, strengths, and assets. A company should consider both the internal and external factors an align those that are advantageous in meeting in meeting the customers’ needs in the competitive market. Another temporary advantage is setting up a strategy. Managers determine the companies’ strategies that they intend to pursue and eliminate those that seem irrelevant (Rumelt, 2011). Exploiting the temporary competitive advantage helps businesses to adopt easily even in cases of stiff competition.
Temporary competitive advantages are commonly experienced in environments with emergence of new competitors. The firm’s owners and directors need to be very careful with competitors to avoid being overshadowed by new industries. Shortening of the strategy life cycle is important, as the industry is able to focus on the current trends around the business. By doing this, entrepreneurs establish exactly what should be done to overcome competition of new entrants. Product lifecycle on the other hand refers to the stages that a product goes through from the time of establishment to the time of removal from the market. Shortening of a product’s lifecycle reduces the costs of a long supply chain making the firm cope with rising competition.
The Fuji Photo Film company has successfully exploited the temporary competitive advantage to establish itself. The introduction of the Sony digital camera through the adoption of proper technology made the company to prepare extensively in the competition with other photography businesses. By developing quality products, qualified management and establishment of well-recognized brands has made Fuji Photo Film company to remain competitive globally. The company should continue advancing their products in order to remain competitive. This is only possible if the company is able to evaluate the strengths and weaknesses of both new and established competitors in the market (Teece, 2010).
In conclusion, completion in the modern world is increasing due to the emergence of new firms and innovation of new products. Rita McGrath suggests that stability, not change, is the most dangerous state that affects dynamic environments. This means that the competitive advantage has changed the manner in which people run their organizations. The main aim of a company is to remain competitive, make profits, and finally achieve its goals.
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