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Competitive Advantage

Essay by   •  January 14, 2011  •  1,302 Words (6 Pages)  •  1,424 Views

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An organization is a unitary entity with each separate subsystem element and individual member of the organization committed to the organizations goals and purposes. All members of the organization are driven only by the needs and priorities of the organization as a whole which are entirely clear and understood. The information on which decisions are made is clear, unambiguous, objective and freely available throughout the organization.

Operation management is the term which is used for the activities, decisions and responsibilities of operations managers.

The transformation process model can also be used within operations. Look inside most operations and they will made up of several units or departments which themselves act as smaller versions of the whole operation of which they form a part. For example, a television programmed and video production company has inputs of production, technical and and administrative staff,cameras,lighting, sound and recording equipment, studio space,props,video tape, and so on. It transforms these into finished programmers and promotional videos. Within this overall operation, however, there are many smaller operations. A firm gains competitive advantage by performing the value chain activities better or cheaper than competitors. A firms value chain may differ in competitive scope from that of competitors .other factors are also important for competitive advantage: widening or narrowing the geographic markets served, the extent of integration, interrelationships with other industries, coalitions or joint ventures. A firm's value chain is composed of 9 generic activities of primary and support activities which are linked in some ways to each other and to the activities of its suppliers, channels, and buyers. These linkages affect competitive advantage and help us analyze relative cost position, differentiation, and competitive scope.

Every value activity employs purchased inputs (procurement), human resources, and some form of technology to perform its function. Value activities are divided into 2 broad types: primary activities and support activities.

Primary activities are involved in the creation of the product, as well as its sale and it's after sale assistance.

Support activities include: the infrastructure of the firm which supports the entire chain, human resource management, technology development, and procurement. Value activities determine whether a firm is high or low cost. It also explains the firm's contribution to buyer needs and its competitive advantage.

The value chain is is a system of interdependent activities. There are linkages that relate value activities. For example, purchasing high quality raw materials improves manufacturing output.

Linkages should be optimized and coordinated in order to achieve competitive advantage. Optimization and coordination can reduce costs. However there are linkages between primary and support activities.

Information systems are very important in gaining competitive advantage from linkages. Managing linkages is not easy; therefore this gives sustainable advantage to the firm.

Companies that compete effectively are usually fast in introducing products to market and responding quickly to customer complaints. They have consistently high quality products, they have good insights about evolving customer needs and they generate new ideas and innovations.

Honda started as a manufacturer of motorcycle engines, and later became a dynamic rival to general motors and ford.

Companies need to develop hard to imitate organizational capabilities.

A capability is a set of business processes that are strategically understood, and that deliver value to customers by satisfying customer's needs.

Competencies have been defined as the combination of individual technologies and production skills. Competencies are not the whole story behind success and growth of companies. Capabilities are also important. What made Honda very successful besides its core competencies in engines was its focus on capabilities.

Capabilities are more broadly based encompassing the entire value chain while capabilities are more visible to the customer.

Consumers choose among different products based on their perceptions of the products value and its ability to offer the most total satisfaction. People choose the product that gives the most benefit for the money spent the greatest value.

Processes should be flexible and robust to serve different businesses. However, most companies will move to capabilities based competition.

Competitive advantage focuses on productivity advantage and value advantage: Productivity advantage means that we should have reduction in cost also this may increase the efficiency and the productivity. However, value advantage focuses on the quality and good service of products as much as value advantage adds benefits to the customers.

Since a long time GM, Ford and Chrysler are American tools. They are responsible for a significant percentage of all American jobs. The automobile industry was the main issue on how America lived, worked, played in helping the country grow in the beginning of the twentieth century. However, after Chrysler's merger with Daimler which have downsizing in its department. The US industry was facing a decrease in sales, financial problems and relentless of pressure of globalization and foreign competition. GM for example estimates it will employ about 86000 employees

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