Competitive Advantage Has Evolved Business Essay

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Competitive advantage in today's dynamic business environment has moved on enormously since the time Michael Porter (1980) devised the generic strategies. This is supported by Jay Kandampully and Ria Duddy whom state "Traditional approaches to management and marketing are an inadequate means of keeping abreast with an escalating competitive market" (Management Decision 1999). They go on further to suggest "A firm's competitive advantage is their ability to serve customers present and future needs".

Conflict between different stakeholders is inevitable in a functional business; disputes that are mainly arises between the employer and employee includes, wage demands management policies, working conditions, political goals and or social issues. A successful business will depend on its effectiveness and strategies in management these conflicts. Strategies include, using communications systems, rewarding the employees, training and develop net, and flexible working conditions. In applying these strategies, a business will need to know if these strategies implemented are effective, otherwise would need to be amended

Forward looking organisations are today exploiting new sources of competitive advantage, relationships is now seen as a key source of creating and sustaining a competitive advantage. The long-term success of a business can be argued is due to there "ability to expand and maintain a large and loyal customer base" (management decision 1999). Many Business's have recognised the importance of customer loyalty such as Tesco's who have the 'loyalty card' whereby customers who consistently use their card are rewarded; this will help in building a 'long term' relationship.

As Doyle and Stern state relationship marketing is a long term, continuous series of transactions between parties. In today's environment forward thinking organisations are realising "the annual profits generated from a customer who has been with a company for seven years are typically more than five times the amount it generates in the first year" (Doyle Stern). Thus "Organisations have realised that it is five times more expensive to attract a new customer than it is to retain an existing one" (Heskett et al., 1990). Doyle and Stern (2006) make a point that profits today are derived from customers won in the past, this goes along with the previous point.

Sanderson (1998) states Porter's ideas in 1985 are not as valued today in comparison to those of Hamel and Prahalad (1994) whereby a 'competence' approach is undertaken "where managers seek to find advantage through an internal analysis of the key resources which the organisation own" (management decision 1998). Sanderson (1998) goes on to reinforce the importance of the customer by delivering his view that "the current shift from customer focus to customer driven can only continue". Many business today operate under a customer satisfaction ethic, one such is Enterprise Rent-a-Car. Enterprise operates under a customer service based culture and has seen incredible success in the UK within the rental car industry since there entry into the UK market. "The company recorded revenues of $9 billion during the fiscal year ended July 2006, an increase of 8.9% over 2005." (Datamonitor)

Their success according to Jack Taylor the founder of the business was due to following the core values based around exceeding customer expectations. Doyle and Stern (2006) state "customers who rate themselves as 'highly satisfied' are six times more likely to buy again"

Innovation is a key component for businesses in the 21st Century to stay competitive, as Kandampully and Duddy state "In this highly competitive business world, firms cannot compete on yesterday's standards and expect to be the winner today". Due to the business environment "Technological changes today are rapid and commonly discontinuous, leading to relatively short product life spans" (Achrol 19991). Thus forward thinking organisations are aware there is a need for continuous innovation for maintaining a competitive advantage. To withhold a sustainable advantage "firms will have to out innovate the competition continuously" although is innovation alone enough to hold a competitive advantage. As Sanderson (1998) states it's "Become imperative that firms not only innovate, but also anticipate and create for the future". By looking into the future organisations may ensure they stay at the top of their business if they do not then the outcome could be the same as the Swiss watch industry. The industry once "manufactured nearly 65 per cent of all watches" which accumulated to "90 per cent of the trade", although today this is no longer true as they now only "control 10 per cent" (management decision) with the Japanese now having the majority share. The quality of the Swiss watch is still extremely high but the industry failed to keep up with the changing environment and the need to innovate, thus they were no longer meeting the needs or desires of the customers.

The performance appraisal is one of the most important to the staff and the company. It can increase staff self-esteem and motivation to perform effectively in the company, and it also gain new insight into staff and supervisors. Performance appraisal not only develops valuable communication among appraisal participants, but also encourages increased self-understanding among staff. Performance appraisal can help to 'distribute rewards on a fair and credible basis and clarify organizational goals so they can be more readily accepted, and it is the best way to improve institutional/departmental manpower planning, test validation, and development of training programs' (Winston and creamer, 1997).

Motivation is defined as 'the arousal, direction and persistence of behavior. Motivation refer to the forces either within or external to a person that arouse enthusiasm and persistence to pursue a certain course of action' (Samson. Daft. 2003. Pp 524). In all the companies, employee motivation affects productivity. Understand motivation can help managers understand what prompts people to initiate action and what influences their choice of action. Fran Tarkenton said "people don't change their behavior unless it makes a difference for them to do so." People's motivation is means that.

The motivation the manager want see is that employees are led effectively, they will seek to give of their best voluntarily without the need for control through rules and sanctions.

Motivation is the responsibility of all managers. The most valuable asset of a company is employees. 'The manager need to energizes, leads, guides and motivates the employee. They show the employees how to fulfill their needs while accomplishing the goals of the company. Motivated and growth oriented employees are happy, committed and productive' (Herzberg, 1998, pp. 53-62).

Motivation plays a very important role in human resource management, also in the company, it improves efficiency with which the job is done, and it also leads to higher productivity and better quality work. It not only can creates confidence in employees, but also leads to lower supervisory costs, the most important is it reduces labour turnover, absenteeism, complaints and grievances from the employees.

Human Resource Management is a 'planned approach to managing people effectively for performance' (Legge, Karen, 2004). That's how we live the belief that "people are our most important asset". Human resource management can establish a more open and flexible management style so that staff will be motivated, developed and managed in a way that they can and will give of their best to support the company. To successful developing a company need consider recruitment, training, performance appraisals, and motivation, because they all play a key role in the management. For these resources can help the firms effectively use employee skills to develop opportunities and bring the maximum benefit to the company, so we can say they support of human resource management.

Strategic alliances are becoming much more abundant in the 21st Century with globalisation being the main reason. Sanderson (1998) states there are a way for enterprises to get involved within global competition. (Management decision 1998). By creating an alliance it can offer multiple advantages, for instance by combining resources from two different sources then economies of scale may be achieved. Sanderson (1998) puts the point forward that "the alliance is also a means to divide the risk for a sole firm". Although in practise many problems can arise such as "difficulties in the co-ordination with the partners who may have different or even contradictory targets" (management decision 1998). For example when Air Canada formed "Star Alliance" it helped in creating a competitive advantage as it created a benefit for the customer, Kandampully and Duddy stated the alliance not only provided customers with flexibility in air travel- but established a service advantage that proffers benefits for all those comprising the partnership network. Therefore Sanderson (1998) makes a valid judgement in that "alliances are a tool providing the extension or the consolidation of a competitive advantage, but rarely the means to create one" (management decision 1998)

Knowledge in the 21st Century holds significant power for an organisation, this agrees with the views of Allee (1997) who suggested "there is a powerful relationship between knowledge and power". Knowledge management has become an important of many organisations process of creating a competitive advantage. The problem lies with the limited time that knowledge is actually valuable for as Allee (1997) suggest "knowledge is always changing" and therefore "renewing knowledge is the key to competitive advantage". Knowledge management has become a vital part of the make-up of an organisation, with forward thinking organisations realising that knowledge is the starting point for creating a competitive advantage. Knowledge is needed to be able to innovate, but also in creating long term relationships future needs of customers as mentioned need to be addressed without this knowledge then it will not be possible to do.

Competitive advantage has evolved since Porter devised the generic strategies, although in many ways they still hold some value. Although in today's dynamic environment organisations are finding new ways to compete and sustain an advantage, no longer does price leadership for example lead to a sustainable advantage but merely creates a negative pricing environment. Organisations in the 21st Century are realising the constant need for change they need to carry out from within to stay competitive on the outside.