Wednesday, August 7, 2019
Competition to Gain Competitive Advantage among Firms Essay Example for Free
Competition to Gain Competitive Advantage among Firms Essay In the current world market, there are many products and services available to fulfill the needs of individual and businesses. According to Barney, Wright and Ketchen (2001), to succeed in such a competitive market, a competitive advantage is required to provide any firm with necessary tools, useful in increasing sales and market share, improving profit margins for a given period of time in a new existing market, ensure survival of the firm in extremely competitive markets and also develop hard to copy mixes. A firm that lacks competitive advantage can imitate firms that already have an edge in competition, either through direct duplication of resources or substitution (Combe, 2006). The firm can determine which way to go, by first conducting a research of the main competitors, so as to identify the resources they have, that contribute to their success in the market (Porter, 1980). When this is established, the firm should then evaluate itself so as to know the resources it has, and whether it is feasible to invest on these resources so as to improve its competitiveness in the market. Among the things that the firms can do to improve its competitive advantage is to introduce new products and processes, it can also adopt managerial methods and organizational form from the better firms and also engage in timely investment during market entry (Combe, 2006). In addition to this, the firm should learn what the customers want, carefully analyze their competitors and create product differentiation with creative techniques. The goal of any new introduction is to meet consumersÃ¢â¬â¢ needs with a quality product at the lowest possible cost in order to return the highest level of profit (Combe, 2006). Introduction of new products can be broken down into five distinct parts which include idea validation, conceptual design, specification and design, prototype and testing and commercialization (Porter, COMPETITIVE ADVANTAGE 1980). If the new product satisfies the consumers needs then it going to be appreciated well in the market, and put the company in a good competitive edge. Adopting managerial methods and organizational form is also important. The firm should adopt the managerial methods practiced by the better firm so as to realize a competitive edge (Barney et al. , 2001). This poses some challenges in terms of resources in cases where additional input of capital is required. Nevertheless if the investment is worth, then we should not give up. Also investments in the market should be carried out timely so that the prevailing market conditions do not negatively affect the investments leading to big loses incurred by the firm (Porter, 1980). The firm should investigate to know the best investment periods so that itÃ¢â¬â¢s on the correct path of competition. Bad timing of entry into the market can really make any firm to lose grip of the market by incurring great loses that might take time for the firm to recover (Barney et al. , 2001). Thirdly the firm should analyze the market to know what the consumers want and the form in which they want it. If the customer becomes the priority in any firm, then the firm should realize some benefits as a result of customer loyalty (Porter, 1980). The design of the products should also be done creatively in a way that is most convenient to the customers. Products may be similar in all aspects but a small difference in presentation can greatly increase its demand in the market. Competitive advantage can be attained if the current strategy is value-creating and not currently being implemented by present or possible future competitors (Barney et al. , 1991). Competitive advantage has the ability to be sustained but a competing firm can enter the market with a resource that has the ability to invalidate the priorsÃ¢â¬â¢ firmsÃ¢â¬â¢ competitive advantage and is COMPETITIVE ADVANTAGE therefore independent of timeframe. When imitation actions comes to an end without disrupting the firms competitive advantage then the firms strategy can be called sustainable. Porter (1985) portrays contrary views that competitive advantage is maintained when it provides above average returns in the long run.