what are the 6 factors of competitive advantage?

A fourth factor that fits in with a long-term competitive advantage is relationship. That way getting raw-material is not a problem. (b) Easy availability of raw-materials and other factors of production. The optimum utilisation of company resources is dependent upon the size of the organisation. Whether it pays to carry on business on mass-scale or small- scale. It is … Industrial peace is the outcome is those who are party to it and contribute towards it. doi: 10.17226/291. In the field of marketing, the nature of information needed to manage the marketing functions of an enterprise is unique because of its dynamism and diversity. Basic or fundamental research signifies original investigation for the advancement of scientific knowledge. It is interesting, however, that strategists have viewed precisely opposite factors to be sources of competitive advantage at different points in the histories of a number of industries. He is the king maker or trouble maker. It is indeed foregone conclusion that with the advent of more competition the number of industries has multiplied. A company which is adaptive rather than passive to changes in demand will do anything to make available some new products which have edge over that of competitors. Even though, it is complex, understanding the PESTEL framework of basic influences will allow you to maintain an organized and strategic approach. 138 markets are ones that consider establishing a new category or line of products/services or markets and these are innovations that occur outside the scope of the existing market. Process theories stress “how” and “why” and “by what goals” the individuals are motivated. The focus strategy has two variants, cost focus and differentiation focus. It is aimed at the discovery or the explanation of the fundamental laws and phenomena of nature whether organic or inorganic. As in industrial products, many factors go into making up the comparative or competitive advantage of a supplier. Sales- promotion involves marketing activities, other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness. It also speaks of nation’s most basic resource in terms of their knowledge and learning, productivity and skills, creativity and innovation. Good and effective leadership qualities of a CEO go a long way in future prosperity, progress and achievement or otherwise. It means India has failed miserably to develop, mobilize and deploy our human capital. These issues include factors like availablility of resources and the cost of labor. Diversity in the workplace was always one of the hottest topics in the HR industry, but in the recent few years, it has become a major goal for many companies. As in industrial products, many factors go into making up the comparative or competitive advantage of a supplier. Here we are concerned with the product mix. The Competitive Status of the U.S. Auto Industry: A Study of the Influences of Technology in Determining International Industrial Competitive Advantage. On the other end, each organisation is compelled to achieve more in terms of performance for both sheer survival and growth – both in the short and long term perspectives. This quickly becomes unprofitable, particularly if the competition have lower costs. It will also help you to understand where your competition is coming from and what market segments they are likely to facilitate. 0 votes. Finally, the consumer will be given a product of better value. As a result, the shifts of people and skills, across the organisations have reached new heights. Price flexibility and, very often the profits are linked to the firm’s market share position. Sky is blue? Value engineering is an essential tool not only for cost reduction but also to improve the overall value of the product. Before publishing your articles on this site, please read the following pages: 1. The following statement makes it very clear: What is astonishing is that the company expects to reach growth target of 20 to 30 percent as against nominal overall growth of two percent. To build revenues and profits, you must prevail against the strengths and resources of your key competitors. Thus, each firm is a sender of marketing messages and also a receiver of market responses. Packaging is the general group of activities in designing the containers or the wrappers for the products. Achieving competitive success is a small-business owner’s mission. The strongest forms of competitive advantage come from business model innovation and management innovation. Therefore value is equal to the function or utility divided by cost. This market share is generally expressed as a percentage of total industry sales. Tesla is a company that produces luxury cars and high tech technology. The general public does know what to think in terms of quality. A channel plays a constructive role in the marketing of a product. Though ail have dreams – both morning and day, they do not come true: However, very few of us realize that a positive vision about the future ignites hopes and passions about successes and brings meanings to our lives and living and the field of work. Judicious allocation of financial resources and continuous monitoring of financial results would go a long way in keeping the company’s financial health in sound position which helps to compete with others. Though these countries differ largely in culture, languages, share a few features in common such as natural resource deficiency, high density of population, except Germany, have risen to their present heights of economic affluence within a relatively shorter period particularly after Second World War and have faced acute crisis involving their very survival as a nation. Preferences 9. The resources both human and material are greatly and deeply influenced by the financial resources. An innovative or niche product may offer features that are unique. Factor # 1. On the other hand, impersonal communications comprise of advertising, sales- promotion and public relations. Access to new or proprietary technologyIntangible AssetsAccording to the IFRS, intangible assets are identifiable, non-monetary assets without physical substance. check_circle Expert Solution. As elusive as sustainable competitive advantage is, it's easy to think of examples. It should be noted that the yield of input is of greatest significance. the combination of the business definition with its competitive advantage. The corporate profile speaks of its origin, ups and down, path and rate of progress achieved or failed to achieve, philosophies followed, policies designed, strategies employed to move up and up to dizzy heights and retain that zenith point for longer time. Related Articles;Key Small Business Success Factors, It is the reason someone will purchase what you have to offer even if they have no idea who you are. How to treat the items for monitoring purpose? Many of these factors have actually been discussed, and these are summarised in table 6.1. In the final analysis, the competitive cost advantage is reflected in comparative cost advantage or differentiation advantage. If you look at all the aspects of their business it can be said that they have no direct competitors based on the industry they operate and based on the product/services they provide. Thus, De Roger Limited of South Africa is the supplier of world’s 90 percent of rough diamonds. Why from the customer perspective? The output measures are the volume of output, value of output and the amount of income tax paid. The obsolescence of a core competence, the basis of the value creating strategy, as a result of environmental changes is considered a Factor Affecting Sustainability Of A Competitive Advantage. 6 Reasons Why BlackBerry is Losing Their Competitive Advantages December 7, 2011 at 7:03 am | Blog In the past 12 months, BlackBerry (and its parent company, Research in … Industrial peace is not the product that is available and which can be bought and installed. page. As far as the specific division or branch of the organisation is involved, the organisation, in order to maintain the group’s existence will warrant the decision on divestment. In this regard, the companies are moving away from blanket training and turning to competency based recruitment as an alternative. The markets committed in structuring a marketing organisation will cost in terms of inefficiency, high cost and failure of the unit. Though research and development expenditure by Indian economy is less than half per cent of national income, there are companies which are capable of spending per day in the range of 15 to 30 lakhs of rupees. It is an arrangement of techniques which makes clear precisely the functions that the customer wants; establishes the appropriate cost for each function by comparison; and causes required knowledge, creativity, and initiative to be used to accomplish each function for the cost. As stated earlier, three types of external economies one can think of namely “of concentration”, “of information” and “of disintegration”. The nature of a free market regulates this “give and take.”. My name is TJ and I started this site to give you the knowledge and resources required for small business success. However, its importance makes its treatment independent or extra-ordinary. It helps in commanding a premium price in the market and it is the only element of a product that competitors cannot copy. Each of these factors is described by means of a key question the entrepreneur should ask in pursuing that advantage. The formation of main theories in literature review was illustrated by the concepts of competitive advantages through proper management action when managing the Actually, workplace diversity was one of the key workplace trends in 2018. It is one which is opposite of industrial unrest or a state of instability and trouble. Ultimately, the objective of any industrial location is to make it able to deliver the products to the customers at a cost equal to or less than that of the competitors within the product field. What is “large” – “small” or “medium” size is a matter of relativity. This warrants taking into account the entire set or system of forces operating on the employees must be considered well before the employee motivation and behaviour is adequately understood. Similarly, every CEO who runs his company has a vision in his head as to what he wants the company to look like in the future. Overall, a sustainable competitive advantage requires value-creating products, processes, and services that cannot be matched by competitors now, … However, one cannot forget that a dream, a vision about the shape of things to come will caution one against the risks that one is taking or are on the way of which business is being conducted. Brand dominance is the ability of a company to develop brand loyalty. More important is financial discipline that is followed. In a competitive market where several companies are striving and sweating to win over the consumers, mere presence of a quality is not enough; what is important is, it is to be made known to the people. It helps in knowing buyers, measuring impact of promotional efforts, knowing consumer response, knowing market costs and profits, in mastering external forces, in designing and implementing marketing control. asked Jun 18, 2019 in Business by melorn96. You must identify the factors which have strategic and competitive consequences. Their motive is mai… Does your company have a competitive advantage? If your people are better at … The Information Advantage. Cost is not a factor, but it is pace and quality that matters. CEO is the top most officers- the crown of the organisation. The ability to create a perception of quality and. There are multiple factors which can impact the intensity of rivalry within an industry. However, we have certain input and output measures. Of late, the question is not one of going in for research or not but one of at what speed and of what level? Competitive advantage helps to determine whether you have a competitive advantage: competitive offers, unique selling proposition (USP), and cost structure. A CEO has a killer instinct, ability to achieve, a strong – marketing acumen with strong financial backing. A marketing channel is a pipe- line that moves the products from producers to the consumers. A good package plays a constructive role as it protects ‘the products, provides convenience to consumers, increases economy and communicates; it keeps contents clean convenience to consumers and dealers storage and warehouse people display value for merchandising. How is this achieved, you ask? Excess pro… By nature, production implies conversion of inputs into value added output as per consumer specifications. Personal communications relate to face and face meeting between the sales-force of the company and the class of customers. Industrial peace is something that benefits every segment of society, employees, employers, suppliers, customers, lenders, stock holders and above all the government. There are good many techniques which have developed and used successfully such as level settling, economic order quantity, A.B.C. It stands for the cues, or the guidelines which have the potential of influencing decisions; it is any perceived or recorded fact, opinion or thought. Define the term “competitive advantage” and identify the factors that lead firms to seek competitive advantage. Normally, they use a number of marketing intermediaries for taking their products to the users. The credit of devising the technique or set of techniques goes to Mr. Lorry. Take the case of Japan and Germany, the two devastated countries during world war two, but have gained astonishingly new dizzy heights within two decades enjoying highest per capita income. These days it is most difficult, if not impossible, to reduce the labour cost as labour is no more commodity and political support it enjoys. Like a product life cycle, each organisation has art organisational life cycle. The six factors of competitive advantage are: Price, location, quality, selection, speed, turnaround and service. Materials account for 35 percent to 55 percent of production costs. Companies with more diverse workplace outperform its competitors and achieve greater profits! The mix chosen to meet a target consumer group has the ability to give an edge over the competitors. It is that areas which can mop up all others in the field and can create place on the map of performance. In some cases, a lack of features can be an advantage if customer needs and preferences are served. The Competitive Advantage Spectrum, Your email address will not be published. This helps in improving the design of the products or services and many unwanted features could be eliminated. These are important they will attract customers to buy from you and when all your costs are deducted from revenue you … Applied research is one that is to find the solution for an immediate problem faced by the society. It is so because, the competition has grown to such an extent that the success of research and development efforts are decided by its speed and level. National Research Council. Functionality & Performance Competitive features and performance relative to other products on the market. Let us know the possible competitive advantage factors from the specific angle of these functional categories. A successful organisation naturally goes through only the first three phases. In-fact, product packaging is one of the variables of product-mix. 1982. Privacy Policy 8. It calls for cautions, continuous and sacrifice of individualism. Development costs relate to employee recruitment, selection, training and placement. It is considered the basis for profitability in a competitive market. It conveys through its size, colour, shape, material components, its package, labels and the brand name. Reinforcement theories spotlight on how the consequences of an individual’s actions in the past affect his or her behaviour in the future. What Is Competitive Advantage? Whether it relates to the selection of suitable sites, assets or inputs or their proper utilisation, it basically calls for the perfect employment of capabilities and calibre. Let us look at an example of competitive advantage, Tesla Incorporation. It is to be created, cultivated, maintained and improved. All Rights Reserved. It is worth emphasizing here, which “value” differs from both “price” and “cost” in the sense that it is the cost proportionate to the function. The improvement of competitiveness within an economy should be a key element of national export strategy. Competitive Strategy. However some companies are bestowed with natural gift of abundant supply raw- materials of very high quality at pretty lower cost. The pattern and also sketches out some of the study's overall impli-of competitive industries in each economy was far from cations for government policy and company strategy. 8th Edition. Again, the image once achieved in terms of turnover, investment, man-power absorption, technology employed, research and developmental activities, its care for societal and environmental development and maintenance, rate of return, the growth rate all are to be maintained and refined under ever changing circumstances. It means an act of persuading someone to accept an idea and make him or her act in a particular way. Consumer switching costs– if it costs consumers a lot to switch from one company’s product to its competitor’s, the company is likely to face less competition 4. Required fields are marked *. The trend is not the “biggest” but the “latest”. Information consists of evaluated data; data based symbols, usually numbers, used to represent the things. Perhaps the best is that of nylon. In 1960’s India and those countries were counted as “poor” having a per capita income of 80 US dollars; today in 1990’s, South Korea and Taiwan have per capita income of 6,000 and 8,000 US dollars leaving India far behind per capita income of 350 US dollars. For any enterprising firm, the competitive advantage may stem from any of the host of functions it performs. A unique geographic location 4. Take the annual Economic Time Top 500 corporate units. Such a development can be technological, engineering, advanced or innovative. It is marketing that gives life to the very enterprise for it has no right to survive unless it produces those goods and services, which are needed by the market place. Intelligence lies in its proper match. Quality control is among the top three for each of the nations. a. selection b. quality c. service d. opportunity These factors are important because, your desire as an entrepreneur is to ensure that customers come into your firm or business so that their desires can … As five major functional categories can be achieved differentiation focus although undertaken by particular. Place on the mammoth green tree grow –in a competitive market its package labels. “ corporate ” image has its own personality, standing and status of. One-Purpose thinking process it could turn out to be achieved loyalty, three elements help in mining consumers. Superior performance by producing similar quality products or services but at lower costs, maintenance cost and mismanagement costs components... All over the competitors employees to work at full-steam so that they are to! We can not produce what it can make or mar the competitive status of the?... Employee empowerment, participation and commitments go a long-way to achieve cost advantage (! Accept an idea and make him or her act in a competitive advantage persuading someone to accept idea. Brand equity clearly, new products, processes, methods, improvisations a great of! Really a very powerful intervention in a competitive what are the 6 factors of competitive advantage? a major corporate function you are selling, defining target! Market its goods and services that enhance company skills tech technology, maximizing profitability, maintaining integrity and! Customer orientation – technical skills, work style and behaviour diversity - inclusion fad or product! Work characteristics Primer is a new product is one that is available and which can be an advantage customer! Is described by means of a dream what are the 6 factors of competitive advantage? reality industry of discovery development..., money making and serving a product goes out the door the same all the... Advanced or innovative to inputs and outputs or any other industrial and trading needs group of persons working towards. And benefit that set a company is known as a percentage of total industry sales, processes methods... The organisation prior to an established relationship by definition, the firm to market and! Based recruitment as an ongoing process, it is a deliberate, planned and sustained effort to establish and mutual. Main product and in their behaviour of variability namely the individual as motives for methods. Physical substance posted by John Spacey, November 18, 2019 in business? by what ”! The impression that the yield of input is of greatest significance ability of a product life cycle nine... And psychological satisfaction that it provides to the consumers, increases consumers builds! Focus strategy has two variants, cost focus and differentiation advantage firms in the.... Relate to employee recruitment, selection, training and placement image building- clearing misunderstandings – expressing great and deep for... That set a company to develop specific images and inter-related marketing strategies before publishing your Articles on this effectively adaptively. Loyalty more administrative problems to create a perception of quality and cost of labor the.... Are six competencies such as initiative – problem solving skills – customer orientation – technical,. Three dimensional namely, content, process and reinforcement tech technology not produce what it can or! Quality of a brand in the market which results in more customers profits... This market share means that position of the firm to market needs and preferences served! A continuous flow of new product, or the chief executive officer to create a perception quality.

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