Strategic Management and Competitive Advantage - Essay Example

Running Head: Strategic Management Customer’s Name: Institution: Customer’s Course Tutor’s Name March 26, 2016. Many companies are striving to gain a competitive advantage that is to be sustained for a long period of time. It may seem easy on the ground but a lot of skills and knowledge needs to be put together where such attributes will act as tools to gain the competitive advantage. Among some of the tools that can be implemented vary from the recourses used or the kind of manpower practiced. Competitive advantage is the key determinant to know how successful a company is and the level of performance that it has (Moldoveanu, 2009). This essay will look at resources required to achieve a safe playing ground, what to look for in the company to identify company capabilities, the main competencies that a company should have and finally ways that can be adopted so that a firm can maintain and sustain a proper competitive advantage. In any firm there has to be two organizations: the internal and external organization. The internal organization mainly looks at the potential a firm has where it looks at its recourses, the level of competency and the kind of capabilities that it possesses. On the other hand, the external organization seeks to find for open opportunities that the external environment has to offer. Some of the points a firm needs to take into consideration in understanding the competitive advantage is that other competing firms will use distinctive materials so that they can come up with a unique way of adding value to customer products and services (Camilus, 2008). They should also equip themselves with the knowledge that in such a developing economic world, challenges will occur often hence should embrace competitive advantage as it is not leaving any time soon. It is therefore the duty of a firm to maximally explore their current strengths which will help them have an upper hand to compete among other companies. By coming up with new ideas and personnel, companies will thirst their quest in establishing a sustainable competitive environment. Competitive advantage has different functions which among them would be that due to changes in the environment, it affects the strength of competition. It has a duty to identify different substitutes and their availability and has a role to play in distinguishing how unique a core competence can be (Cailluet and Richard, 2008). In analyzing the organizations internal structure, several analyses have to be made. Among them is the global economy where traditional sources are now being overtaken by competitors globally due to the mindset that has been adopted globally. This means that different countries adopt different ways of creating ideas meaning no single country can be dependent on another. With global enhancing of ideas, different outcomes are presented hence creating value hence boosting the amount of resources available and increasing the levels of capabilities not forgetting the diverse core competencies presented (Teresa and Khaire 2008). Value can be measured in various ways and in this case value will be dependent on how much a consumer is willing to spend on a given product due to the qualities accompanied by it. Qualities in this case would be what is best in the market meaning it is above the average market. There exists a relationship between capabilities, competence and resources as with proper resources, a firm is better placed and presented with a lot of strengths which are capabilities that make it have a better hand in have a proper competitive advantage among many firms (Amabile, and Mukti, 2008). With a diversified mindset, a lot of competencies can be achieved making it easier to have an upper hand among different firms. It is with providing quality products and services to consumers that a competitive advantage is gained and this is only possible when firms are able to give the best product as a result of their level of competency. Resources in a firm should the capability of a firm which can be described in a wide scope.Resources entail organizational inputs that a firm feeds its organization and they have to be combined with other factors to bring value to a firm (Adetunji, 2009). Resources can be classified in two: tangible and intangible resources. Tangible resources are those that can be felt including assets while intangible are those things that are deeply attached to a company meaning they have been in the company for a long period of time (Gandhi, Desai and Bok, 1993). It would be right to say that for a company to attain the best competitive advantage; more intangible resources would be preferred in a company than tangible resources. Some of the intangible resources would be innovative resources where this depends on the ability of a firm to come up with diverse ideas (Adegbesan, 2009). Human resources is another type of resource that shows different skills put together with integrated knowledge to come up with creative ideas and finally reputational resources which relies on what stakeholders think about the firms product. This shows how reliable a product is in the market in terms of its reputation and how durable it can last in the global economy (Natarajan, Sridhar and Abdul, 2008). A firm’s capability is gathered over a period of time and is collected through various interactions with both tangible and intangible recourses. Intangible recourses are gathered through skills and knowledge gathered by employees. Capabilities show the ability a firm can outdo other competitors and this is achieved through value addition of products and services which are acquired over a period of time (Galbreath and Rogers, 1999). Strengths in a company will only be successful if specific resources are allocated to perform specific tasks. This has to be developed in different functions which among them may include research and development, human resource, marketing and management to mention but few. An example of a firm’s capability would be Walmart a company that deals with distribution of products. It is the work of human resource to ensure that that technique in the logistics management are effective and can be relied upon. Walmart has effective management information systems making it have high levels of capability to monitor the movement of inventories in their point of sale centers. This enables the company collect data in an efficient way through availability of effective resources: both tangible and intangible. A firm can use the four specific criteria as an instrument to classify and even come up with core competencies. These are; Rare capabilities which are scarcely found. Valuable capabilities that seek to equalize between threats and available opportunities. Costly to imitate capabilities which involves a unique feature that an organization is identified with. Non substitutable capabilities where only the firm has specific knowledge and has an outstanding organizational culture where no other company can copy. A sustainable competitive advantage will be achieved when each firm comes up with its unique strategies or in a situation where there is no duplication of original resources. This is possible when different competitors will imitate a service that will last for a long time thus making it unique (Oliver, 2000). That is the only way all the four criteria selection will achieve a competitive advantage. In order to achieve a sustainable competitive advantage, several factors have to be considered. Among them may include customer loyalty where a firm should make sure that customers are attracted to a particular product which can be achieved through maintaining a particular brand and positioning it at specified points. Loyalty services like target card makes the consumer consume a certain product more with the aim of getting gifts and helps also monitor what goods are preferred than others (Malhotra and Keith, 2008). Location also plays a key role in sustaining competence where several stores will be located in a particular area. This reduces the level of advertising hence minimizing costs while increasing revenue on customer growth. Distribution of information also plays a role where manufacturers aim at selling their products at cheap and reasonable prices. This has been efficiently done by Walmart as a retail strategy. Having strong vendor relations will help as products do not have to be sold in huge quantities. This is because a manufacturer can have several retailers selling his products at subsidized prices in short supplies (Fisher, 2007). Having multiple ways of luring consumers can act as an advantage. Taking the example of McDonald, their meals are cheap and at the same time they are known to deliver clean hot and timely delivery on request. This has made this company have a positive reputation for their many positive qualities. To conclude, it has been seen that competitive advantage is the key determinant to know how successful a company is and the level of performance that it has. It has also been found out that firms should equip themselves with the knowledge that in such a developing economic world, challenges will occur often hence should embrace competitive advantage as it is not leaving any time soon. It is therefore the duty of a firm to maximally explore their current strengths which will help them have an upper hand to compete among other companies. Using the four criteria selection for sustainable competitive advantage, firms will reap more if they are more creative and invest more on research as this is the only way to have an upper hand in the changing economy. Reference list Adegbesan, J. A. (2009) “On the Origins of Competitive Advantage: Strategic Factor Markets and Heterogeneous Resources Complementarity.” Academy of Management Review: 463–475. Amabile, T. M., and Mukti K.(2008) “Creativity and the Role of the Leader.” Harvard Business Review. 100. Cailluet, L, and Richard, W. (2008). “The Crafts of Strategy: Special Issue Introduction by the Guest Editors.” Long Range Planning 41, no. 3: 241. Camilus, J. C. (2008) “Strategy as a Wicked Problem.” Harvard Business Review: 98. Fisher, C. (2007) Research and Writing a Dissertation – A Guidebook for Business Students London: Ashford Colour Press Galbreath, J., Rogers, T. 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