Assignment A1 - The Meaning of Competitive Advantage

At the core of strategy theory is the optimization of firm performance -

this means - in short hand, the attainment of competitive advantage.
Within the realm of strategic thinking, there are multiple, related
perspectives on how firms can achieve it.

This assignment will focus on testing your understanding of these

related issues. Your answers should reflect the readings available to
you on myCourses, the pre-recorded webinar and additional
research. Please ensure that your final answers contain a
consolidated list of references using APA style .

Please answer (in no more than 100 words per question) the following:

(a)What is the meaning of competitive advantage? How is it

defined?

A competitive advantage is what makes organizations goods and a

service preferable to all of a customer’s other choices.

In order to obtain a competitive advantage, the organization must be

able to find the relative or differential value greater than its
competitors and transfer this information to the desired target market.
For example, if a company advertises a product at a price lower than a
similar product from a competitor, that company may have a
competitive advantage. The same is true if the advertised product
costs more, but it offers unique features that customers want to pay
for.

(b)According to the external (or positioning) view of strategy, how do firms

achieve and maintain competitive advantage?

This strategy revolves around the company establishing itself as a

"market position" where it can defend itself from competitive forces
and / or influence them in a way that it places them at an advantage
versus its competitors and suppliers. There are five industrial factors
that influence strategy and performance: entry barriers, the threat of
substitution, the bargaining power of buyers, the bargaining power of
suppliers and competition between industry operators. This framework
relates to the "structure - behavior - performance" approach to
industrial organization, in which the structure of the industry (for
example how easily new firms enter) determines firm behavior /
strategy (such as innovation strategies) and hence the company's
performance (Such as earnings).

(c)According to the internal (or resource-based) view of strategy, how do

firms achieve and maintain competitive advantage?

This strategy gives the primary role to factors within the organization.
This view is best expressed in "resource-based company theory". This
strategy views the company as a "set of resources". Resources
include not only tangible resources (such as buildings, machines, and
research laboratories) but also intangible resources such as skills and
interactions between people and systems. Intangible resources are
unique to every company, and when a company finds itself with
different uses of its excess resources, it often chooses those groups
that are closely related to its past activities. The fact that the
company's past experience and history means that the company's
growth is often dependent on the path: the company going tomorrow
depends on how it got to its current location (its future path depends
on its previous track).

(d)How does the dynamic view of competitive advantage contribute to our

understanding of firms achieve industry leadership?

A dynamic picture of competition, in which companies are not only

affected by the environment, but also actively seeking to change it.
The feedback relationship between the company’s strategy and the
environment is the focus of the industry’s “life cycle” studies looking
at the sources and effects of changes in the industry’s structure.

In This strategy we look at the past for a guide about how the firm
arrived at its current position and to future direction.
 (e)Why is innovation a crucial element in business strategy?

Innovation is one of the hallmarks of a successful company, not just

technology or product companies. The importance of innovation
overlaps across industries, markets and even company sizes.

Innovation should increase the company's value in the market, and

thus increase the number of people who buy the best products and
services that this company provides to the market. This can be done if
you know the customer's current likes and dislikes regarding your
existing products.

(f) What role do strategy execution capabilities play in the attainment

of competitive advantage?
Implementing the strategy is essential to the success of any organization. The successful implementation
of a robust and robust strategy gives any organization a significant competitive advantage. Even the best
crafted strategies are worthless if not successfully implemented. Most organizations fail to implement
the strategy despite their strategic importance to any organization. . Implementation of the strategy is a
very complex and multifaceted organizational phenomenon. However, strategic management literature
has traditionally focused on formulating strategy when the real challenge lies in implementation.