Literature Review On Business Strategy And Competitive Analysis Management Essay
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Competitive Advantage is playing a important function in every company, specifically big companies in order to prolong in the competitory environment. At the same clip, there is confusion among companies and besides academicians in term of Competitive Advantage and Organization Performance. The intent of this reappraisal is to research an appropriate definition of competitory advantage, distinguish competitory advantage from organisation public presentation, seek to place beginnings of competitory advantage for houses and better apprehension of why in many industries for many houses competitory advantage is merely a impermanent result due to the influence of environmental uncertainness.
This undertaking paper is to carry through portion of the Business Strategy And Competitive Analysis ( BDMN 7053 ) class demand set by College of Business, University Utara Malaysia. Upon completion of the class, we should be able to understand and hold a broader position about concern scheme.
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3 LITERATURE REVIEW
3.1 Articles review
Rumelt ( 2003 ) , stated that scheme subject for many old ages has been missing a clear definition of competitory advantage and a deep apprehension of the influence of this concept on house public presentation. There has been increasing treatment of and empirical research into competitory advantage in recent old ages ( Ray et al. , 2004 ; Newbert, 2008 ) , nevertheless apprehension of what is competitory advantage and separating this construct from organisation public presentation remains a challenge for the subject ( Powell, 2001 ) . Carry throughing the intent on the findings of appropriate definition on competitory advantage and distinguish competitory advantage from organisation public presentation has leads to the development of utile research propositions which help explicate the relationship between perceived environmental uncertainness, steadfast resources, competitory advantage and organisation public presentation.
Michael Porter was the first author to present the term competitory advantage to the vocabulary of the scheme subject. Initially, the words become confounding for faculty members, concern executives and advisers ( ABCs ) ( Markides, 2000 ) because they have their ain message accepted and embraced by the ABC community. Barney ( 2002 p. 9 ) makes a utile connexion when he says: “ a house experiences competitory advantages when its actions in an industry or market create economic value and when viing houses are prosecuting in similar actions. ” Barney ( 1991 ) argues competitory advantage is achieved when a house is implementing a value making scheme that is non being at the same time implemented by any current or possible rivals. A sustained competitory advantage occurs where the house is implementing a value making scheme non being implemented at the same time by challengers and other houses are unable to double the benefits of this scheme. It is of involvement that Barney ( 1991 ) does non notice on the possibility of competitory advantage being eroded by the invention attempts of rival houses altering the market infinite ( Tushman and O’Reilly, 2004 ; Kim and Mauborgne, 2005 ) .
Similar to positions expressed by Newbert ( 2008 ) , in this paper competitory advantage is non organisation public presentation. This place is a affair of some contention in the literature with authors such as Porter ( 1985 ) , utilizing the footings interchangeably but Powell ( 2001 ) doing a differentiation between the two concepts. The construct of competitory advantage relates to a house keeping a sustainable border over challengers in a peculiar industry puting that can non be eroded over clip. The house with competitory advantage pursues a scheme that is non being executed by a rival house or houses. The scheme implemented by the house with competitory advantage provides the chance for a decrease in costs ( i.e. low cost ) in the proviso of a merchandise and/or service with some propinquity on merchandise and/or service attributes to suppliers of the alternate distinction scheme in a wide market section. Alternately, the house may hold the ability to work market chances with a merchandise and/or service with superior properties ( i.e. distinction ) with some propinquity to low cost suppliers on cost of production or proviso of service in a wide market section. The accomplishment of competitory advantage by a house in an industry is besides aided by the house being able to neutralize menaces from rival houses in the market place ( Barney, 1991 ; Newbert, 2008 ) , and set uping and keeping a clear generic place plays an of import function in this desirable set of fortunes ( Porter, 1985 ) .
In the scheme literature the organisation public presentation concept is normally associated with the accomplishment of strategic ( e.g. gross revenues growing, market portion, per centum of gross revenues from new merchandises, client satisfaction, quality ) and fiscal aims ( e.g. return on assets, return on equity, return on gross revenues ) ( Powell and Dent-Micallef, 1997 ) . Harmonizing to Kaplan and Norton ( 1992, 1996 ) which mentioning to “ Corporate Scorecard ” instance survey pointed out there are several dimensions to tauten public presentation beyond merely the fiscal position including the internal position, the client position and the invention and larning position. They see a demand to equilibrate apprehension of steadfast public presentation across these dimensions and besides the taking effects of the internal position, the client position and invention and larning positions foretelling the fiscal position result. Thus, based on the standard literature reappraisal, competitory advantage and organisation public presentation are different research concepts.
Newbert ( 2008 ) examined the importance of the features of rare and valuable resources and capablenesss on the attainment of competitory advantage and organisation public presentation. Newbert ( 2008 ) found a positive correlativity between the attainment of competitory advantage by a house and better organisation public presentation. Blending larning from the penetrations of Kaplan and Norton ( 1992, 1996 ) and Newbert ( 2008 ) yields the propositions: “ The attainment of competitory advantage by a house is a taking forecaster of the accomplishment of strong organisation public presentation. ” In other words, if a company has identified their competitory advantage, they will utilize it as purchase to execute in the hereafter.
Therefore, Competitive Advantage is non Organization Performance. The synthesis of the literature here evidences that competitory advantage and organisation public presentation are different concepts with the attainment of competitory advantage foretelling strong organisation public presentation. Second, based on Porter ‘s ( 1980, 1985 ) research, competitory advantage can come from a house doing a sound determination or sound determinations overtime in relation to its generic place. Firm graduated table in an industry can be the beginning of competitory advantage assisting the house to be the lowest cost manufacturer or have proximity to the lowest cost manufacturer while giving greater benefits to clients in the proviso of goods and/or services. Third, houses with rare and valuable scheme resources give themselves the best chance of doing sound placement picks, accomplishing competitory advantage and in clip strong organisation public presentation ( Newbert, 2008 ) . Fourth, the dynamic nature of the concern environment, particularly in relation to the influence of rivals, clients, ordinance, engineering and supply of finance is such that the accomplishment of competitory advantage is a dynamic deal – moral force in footings of some houses in some fortunes being able to accomplish sustained competitory advantage and some houses in some industries accomplishing merely impermanent competitory advantage.
Kriegesmann ( 2005 ) states that a common subject of the most popular schemes is a focal point on rational capital or the cognition of people as an of import strategic resource for deriving and keeping a competitory advantage. The cognition of people is an of import strategic resource for organisations, and the direction of cognition is considered critical for long-run success and stableness ( Ipe, 2003 ) . Knowledge has become the primary beginning of competitory advantage for organisations runing in disruptive environments ( Stewart, 1997 ) . Previous Studies suggest the learning organisation and preparation are the keys to larning ( Dougherty, 2004 ) and developing human capital ( Buhler, 2002 ) , and that preparation plays an of import function in a learning organisation ( Kramlinger, 1992 ) .
Research suggests that the learning organisation and transportation of preparation are both critical tools for larning and pull offing cognition in organisations. Furthermore, the acquisition organisation ( Buhler, 2002 ; Davis and Daley, 2008 ; Korth, 2007 ) and transportation of preparation ( Buhler, 2002 ; Dougherty, 2004 ; Velada et al. , 2007 ) are considered to be of import competences for organisations to develop in order to win in today ‘s disruptive market place. The learning organisation is a valuable tool for easing acquisition and cognition direction, and has been described as an of import scheme for doing betterments in organisational public presentation and keeping a competitory advantage ( Buhler, 2002 ; Davis and Daley, 2008 ; Korth, 2007 ) . However, many organisations do non stress on being a acquisition organisation and make non practising transportation of preparation. Therefore, it is believe if a company implement either one of those, could take to betterment in single public presentation and organisational public presentation.
Learning organisation can be defined as an organisation that acquires and transportations knowledge, and so modifies its behaviour based on the cognition. A common yarn of the definitions encompasses three cardinal constituents: acquisition, altering, and bettering. The larning facet includes gaining of new cognition, uninterrupted acquisition, larning from errors, and acquisition by all members of the organisation. The alteration facet includes alterations in behaviour and alterations in the procedures used based on the cognition gained. The betterment facet includes betterments in single public presentation and organisational public presentation from actions taken as a consequence of the erudite information. Easterby-Smith et Al. ( 1999 ) describe organisational acquisition as the procedure of single and corporate acquisition that takes topographic point within an organisation, whereas the learning organisation focuses on the methods and tools to measure and better the quality of larning procedures within an organisation.
To go learning organisation is really important in order to accomplish competitory advantage. This is because the organisation by itself can act upon and ease single and squad to uninterrupted betterment and invention in concern operations. The acquisition organisations need to go an built-in constituent to growing, invention, effectivity and success ( Buckler, 1998 ; Buhler, 2002 ) . ( Buhler, 2002 ; Davis and Daley, 2008 ; Korth, 2007 ) have stressed the importance of the larning organisation as a scheme to better public presentation, and as the lone sustainable competitory advantage for organisations reacting to an progressively unpredictable and disruptive concern environment.
Based on my experience, in Malaysia most of the companies have really expensive experience in covering with disruptive concern environment. For illustration during the fiscal crisis, most of the companies do non expect what will go on and towards the terminal, it can be seen a batch of employees being retrenched and vacate from bing companies. For those who has really good accomplishments, they have been offered by other companies particularly rivals because at the point of clip non many organisations realize that it is really valuable in acquiring right people. The chief impact is there are companies have to fade out and companies can be sustained in the turbulent market, which at the same clip achieved sustainability in competitory advantage against their rivals. One of the grounds – go a learning organisation that emphasize the betterment in their human resources such as staff accomplishments and cognition.
Therefore, it can be seen that nowdays, most of the companies have emphasized the preparation or go a learning organisation. For illustration, in Celcom and Maybank, they have what we called as Business Transformation Plan from 2010 to 2015. In this program, they emphasize the human resources endowments and nucleus typical capablenesss in order to keep and accomplish sustainability in competitory advantage in their several industry. They besides put in program for every staffs, what will be their calling way. The ground being to do every staff clear about the short-run and long-run scheme of the company and what they will be in term of calling development and sweetening. The aim is to do employees loyal and do them experience a portion of the company ‘s constitution. From the position of the company, they really become learning organisations that hold nucleus competences in order to achieve competitory advantage in the industry.
Harmonizing to Barney, 1991 ; Finkelstein and Hambrick, 1996 ; Huselid, 1995 ; Pennings et al. , 1998 ; Pfeffer, 1998 ; Wright et al. , 1995 ) , human capital properties ( including preparation, experience and accomplishments ) – and in peculiar the executives ‘ human capital – have a clear impact on organisational consequences. However, it is non plenty if it is merely based on employees ‘ cognition footing. Therefore, Wright et Al. ( 1995 ) see that despite the house ‘s resources and capacities have added some value in the yesteryear, alterations in clients ‘ demands, in the industry ‘s construction or in engineering may turn them into less valuable in the hereafter. Therefore it is of import to go a learning organisation on order to pull off employees, their cognition and competencies in such a manner that the organisation can construct a long-run competitory advantage and this procedure has to be done continuously from clip to clip.
By and large it is being accepted that human resources and direction patterns can lend towards organisation public presentation and go one of the beginning for competitory advantage. Effective human resource direction will bring forth a higher capacity to pull and keep employees who are qualified and motivated for good public presentation, and besides the benefits from holding equal and qualified employees are legion. Some illustrations are higher profitableness, less rotary motion, higher merchandise quality, lower costs in fabrication and a faster acceptation and execution of the organisational scheme. With the quality and good performing artists in the company plus cognition preparation being implemented from clip to clip, the organisation can accomplish higher and sustainable public presentation to assist the company put to death all the hereafter schemes. Organizational resources can be a beginning of competitory advantage when they are valuable, rare, inimitable and have no replacement. However, if the house wants to obtain this advantage over its challenger, so it will hold to be organized to utilize these resources due to scarceness and degree of optimisation.
Before the resources become a beginning of competitory advantage, human resources must make organisation value and resources are valuable if they allow the organisation to develop schemes that improve efficiency and efficaciousness. It can be seen when the organisation develop different occupations with different accomplishments. Therefore, the person will lend different values from others which at last can give the entirety of organisation values. Second, resources must be rare in order to organize a beginning of competitory advantage. It can be a good arm against its challenger because the organisation holds specific accomplishments which are really rare and limited in the specific industry. Furthermore, the rarity standard is besides connected with the construct of resource specificity and labour mobility ( Williamson, 1985 ) . Third, if a resource is to go a beginning of sustained competitory advantage, it must be inimitable. Firms can obtain human capital in the market, or by developing it internally. In the human resource direction context, if a resource can be duplicated or imitated by another house, so it is non a beginning of sustainable competitory advantage. Finally, for a resource to go a beginning of sustained competitory advantage, it must non hold any replacements.