MacroEnvironment - Competitive Advantage

Explain the concept of competitive advantage. Identify the four general ways to pursue a competitive advantage according to your text.

Ans:

Competitive advantage refers to something that an organization does extremely well, a core competency that clearly sets it apart from its competitors and gives it an advantage over them in the marketplace. This concept is discussed further in Chapter 9 on Strategic Management. For

now, it is important to understand that competitive advantage is an ability to do things better than one’s competitors. When others cannot quickly copy or easily learn to do these things, the competitive advantage becomes more sustainable over time.

1.     Competitive advantage can be achieved through costs—finding ways to operate with lower costs than one’s competitors and thus earn profits with prices that one’s competitors have difficulty matching.

2.     Competitive advantage can be achieved through quality—finding ways to create products and services that are demonstrably of consistently higher quality for customers than what is offered by one’s competitors.

3.     Competitive advantage can be achieved through delivery—finding ways to outperform competitors by delivering products and services to customers faster and consistently on time, and to continue to develop timely new products.

4.     Competitive advantage can be achieved through flexibility—finding ways to adjust and tailor products and services to fit customer needs in ways that are difficult for one’s competitor to match.

Source: Management, 11th Edition - John R. Schermerhorn

MacroEnvironment - Customer Relationship Management & Competitive Advantage

Explain how Customer Relationship Management could be used to gain a competitive advantage?

Ans:

Customer relationship management is used to establish and maintain high standards of customer service. Known as CRM and introduced in the chapter-opening example of Salesforce.com, this approach uses the latest information technologies to maintain intense communication with customers as well as to gather and utilize data regarding their needs and desires. At Marriott International, for example, CRM is supported by special customer management software that tracks information on customer preferences. When you check in to a Marriott hotel, your past requests for things like a king-size bed, no smoking room, and Internet access are likely already in your record. Says Marriott’s chairman: “It’s a big competitive advantage.”

Source: Management, 11th Edition - John R. Schermerhorn

Strategic Management | Discuss the concept of competitive advantage. Include specific examples of companies and their respective competitive advantages to support your answer

Discuss the concept of competitive advantage. Include specific examples of companies and their respective competitive advantages to support your answer.

Answer

Competitive advantage is what sets an organization apart, that is, its distinctive edge. That distinctive edge comes from the organization’s core competencies, which might be in the form of organizational capabilities—the organization does something that others cannot do or does it better than others can do it. For example, Dell has developed a competitive advantage based upon its ability to create a direct-selling channel that’s highly responsive to customers. Southwest Airlines has a competitive advantage because it is skilled in giving passengers what they want—quick, convenient, and fun service. Or those core competencies that lead to competitive advantage also can come from organizational assets or resources—the organization has something that its competitors do not have. For instance, Wal-Mart’s state-of-the-art information systems allows it to monitor and control inventories and supplier relations more efficiently than its competitors, which Wal-Mart has turned into a price advantage.

Source: Management, 11e (Robbins/Coulter)