Generic Building Blocks of Competitive Advantage

STRATEGIC MANAGEMENT ASSIGNMENT

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SUBMITTED BY M. PATCHIAMMAL II MBA Sec - A

GENERIC BUILDING BLOCKS OF COMPETITIVE ADVANTAGE Competitive advantage is a firm’s ability to outperform its competitors (earn higher profits).The source of competitive advantage is value creation for customers. Sustained competitive advantage comes from maintaining higher profits than competitors over long periods of time. The four building blocks are closely related to one another. Because it reduces waste, the time spent fixing defects, and the cost of after-sales service and support, achieving superior quality has an important positive impact on efficiency. Moreover, insofar as superior quality is valued by consumers, it increases the company’s customer responsiveness. Besides, innovation in both products and processes can enhance efficiency, quality, and customer responsiveness. For example, process innovations, such as Toyota’s lean production system, can simultaneously increase efficiency and quality. Similarly, the ability to rapidly develop innovative new products increases a company’s ability to serve its customers. Finally, it is important to keep in mind that achieving superior efficiency, quality, and innovation are all part of achieving superior customer responsiveness.

The relationship between strategies and resources and capabilities:

THE DURABILITY OF COMPETITIVE ADVANTAGE: Barriers to imitation  Speed of imitation by competitors in reducing advantage  Imitation by acquiring similar resources  Imitation of capabilities (more difficult) Limits on competitors  Prior strategic commitments  Absorptive capacity for change Industry dynamism  The rapid innovation shortens product life cycles. AVOIDING FAILURE AND SUSTAINING COMPETITIVE ADVANTAGE:  Focus on the building blocks of competitive advantage.  Institute continuous improvement and learning.  Track best industrial practice and use benchmarking.

 Overcome inertia