Management And Gaining Competitive Advantage Marketing Essay

INTRODUCTION

In order to get the competitive advantage over its competitors, the business must adopt the efficient and effective ways of management. ”MANAGEMENT” is the process in which the manager is assign perform those task which are beneficial for company. Companies must have the hunger to learn new things and ideas for gaining development, and to survive in the market amongst its competitors. Now a day everything is changing very quickly, even the management ideologies as well, so the success of the business is after the adaptation of new changes, and if any business can’t undertake these changes, then whole demand and supply collapse and life of business diminish. In business there are ups and downs come, but only those companies survives, who have trained their employee and have management team to face any downs (crisis).

COMPETITIVE ADVANTAGE It is a state which enables a company to operate in a efficient and higher-quality manner than its competing companies, and which results in benefits accruing to that company. Each and every business wants a success in the market and want to dominate the market. A firm uses utilizes its all existing resources and capabilities to generate a competitive advantage, which leads to a further superior value creation. Following is the diagram to describe the concept of competitive advantage:

RESOURCES

COST ADVANTAGE OR DIFFERENTIATION ADVANTAGE

DINSTINCTIVE COMPETENCIES

VALUE CHAIN

CAPABILITIES

A firm must have resources and capabilities superior to its competitors, Resources are the firm specific assets that are useful for creating advantage and are cost effective, some resources are brand equity, reputation of firm and patents and trademark. Capabilities are the firm ability to utilize its available resources effectively and efficiently.to bring a product to its customers at a rite time, faster than its competitors is also an example of utilizing its resources.

Resources and capabilities collected system its individual capabilities. And it enables innovation and efficiency. Competitive advantage is formed by expending incomes and experiences, in order to get a lower cost or differentiated product. For Example a customer can order a pizza from dominos via online or from digital television, or we can order a domino’s pizza in advance for a week before. Rest of the pizza delivery companies don’t offer this service yet.so dominos is utilizing its all resources to get a hold on pizza market. Example DSGI’s is now offering a buy now pay later offer, for example we can but any product from DSGI’s store and can pay it after thirteen months. None of any other supermarket company is giving this offer maximum they give the time period of six months.so the DSGI’s is getting a competitive advantage over its competitors by getting a differentiation advantage.

SOURCES OF COMPETITIVE ADVANTAGE

Any business can perform well in over its competitors, and can plan for its future and survive more life by some special features’ that no competitors have. The key for success is to knowing what your customers want and finding an efficient and effective way to give it to them.so then the business can enter in a never ending way .the whole purpose of business success is to find a new source of competitive advantage.

QUALITY Every customer wants a product less expensive and durable. Any company with good and less expensive product than its competitors will win out and enjoy more good reputation in market. We might spend extra money on a Toyota than any other brand even if they are a little more costly because of Toyota’s quality.

CONVENIENCE Many customers are prepared to pay a little additional for convenience. This can for having good location and a better customer service for Example a price of coke is bit more than any ordinary retail outlet, but customer prefer to buy the coke from a good reputed retail store like Tesco or Waitrose even if they have to little extra money. Packaging is also a factor in some industries, for example. Speed and accuracy is also a cause of competitive advantage.

INNOVATION Innovation is creative thinking because to place a product, which people demand and want, and which your competitor can’t match, is also a competitive advantage Example Apple Computer, that uses innovation as a source of differentiation in its iPod and iPhone products. Innovation needs to be on going for any one company to win against its competitors.

SERVICE Customer service is a type of competitive advantage, where all the company’s have same products and they cannot differentiate in any other way. Example Car rental companies, all the car rentals charge a same amount. There is little they can do to separate themselves extra than by submission of exceptional customer facility. The same is particular of many sellers like Tesco, Asda, Sainsbury’s and Waitrose etc. BRANDS Many customers are agreeable to pay a slight further for brand, particularly in the fashion trade, but it also relates to many other products. To make a brand is time consuming but this is the only way some industries can distinguish themselves. Example many customers agree to pay extra cash for Toyota over any other car having same specifications.to maintain a standard of brand is a difficult task.

COST: This is a major factor of competitive advantage. Cost advantage is so successful that’s why many companies are moving to China because in china costs are very lesser than in high salary nations. Indeed, there is a descending boundary on this method of competitive advantage. Example, Japanese wagons were once mostly general because they were cheaper than American wagons. Now Korean cars are cheaper. Possibly we will momentarily be buying wagons made in China or India. This means that competitors will continuously reducing their prices as they find more efficient ways of making their product.

IMPORTANCE OF COMPETITIVE ADVANTAGE

Competitive advantages are so important because they can guarantee that a company makes extra incomes for a extensive era of period. For increasing the life of a company, the worth of the Competitive advantages should be considered. Companies can have multiple competitive advantages. Competitive advantage management is important not only position the business but to stand in the market. To know the competitive advantage of company over its competitors companies is the important to generating a leading place in market. Without it, business strategy is inadequate and will be useless as well. Following are the key points of competitive advantage and which can increase the life of business and also the good reputation of any business over its competitors.

Advancement of the business an emphasis on the supervision of competitive advantages will assistance to encourage product and service by applying effective marketing tactics. Advancement of invention and facility plays an important part in the marketing of business.

Network Effect The network effect occurs when a product increase demand from consumers, which now improve the product. Example, eBay benefits from the network effect; by inviting more traders, it has in turn involved more buyers, creating a leading market stake.

High Substituting Costs Another way to earn better returns and increase a business’s existence is to mount switching costs into the business model. Example, wireless telephone companies require to enter into contracts that restrict their capacity to alteration service suppliers.  Some software corporations also have high substituting costs because the learning curve to learn a new software program is often vertical.  By investing in businesses with important competitive gains, means protection of the business.

Features and Copyrights Trademarks and patents is not a very common sources of competitive advantage for some companies but for some companies it is! Example is Shuffle Master–the business generates auto-shufflers that are used in many casinos.  The business stays on top of knowledge and keeps close rules on its copyrights to ensure opponents don’t simply come in the market.  But the company is raising another region of its business: it creates new casino games and then permits them to casinos, letting it to save a vast payment check each month.  These copyrights and features have given Shuffle Master a great position

Image boost managing competitive advantages over your competitors works for the boost of company’s image in the market. Manufactured goods locating, value check and active marketing are the capitals of gaining competitive advantages over opponents. It also helps to set the company or business on the way of success.

Assessment one and only of the necessities of competitive advantage management, frequent valuation of product and service strategies, will help the business to get edge over its competitors. Assessing the quality of the product and service gives the awareness of the appearance in the market and value of the manufactured goods

Strong Trademark Management Having a durable trademark can safeguard a company’s long-term achievement and it also allows businesses to make fit incomes because their trademark lets them to charge a price superior.  For example, specialists not once assumed Starbucks would be effective in charging superior prices for a service product like coffee.  Though, the company has been enthusiastically effective to its brand supervision.  Durable brands have a habit of to create the longest-lasting competitive advantage.

APPROACHES FOR FUTURE PLANNING

Competitor analysis and marketing planners It is important to aware the capabilities of who the company is competing. And in coming to terms the company has to focus not only on the soft factors but on a hard factors (financial resources, management techniques), without understanding this, it is almost inevitable that the marketing planner will fail. The need for advantages of competitive analysis should be apparent and is summarized in terms of how it is capable of: â-  providing an understanding of company’s competitive advantage/disadvantage relative to competitors’ positions â-  helping in making visions into competitors’ strategies – past, present and potential â-  giving an educated base for emerging future strategies to establish rewards over competitors The marketing planners acknowledge the importance of competitive analysis. In reality competitors symbolize a main factor of business achievement, and any failure to take complete reason of their assets and strategies is likely to lead an unnecessarily greater experience to violent and surprising modest changes. There are numerous examples of organizations having been taken by surprise by new competitors who introduce and then play by very different rules of the game. (Think example, of the way in which BA and the other major European companies have been hit by new airlines such as easy Jet and Ryanair; how Hoover and Electrolux were hit by Dyson; how the major clearing banks were seemingly taken by surprise by the telephone and Internet bankers; and how the American car industry was hit by the Japanese.) It is apparent from these sorts of examples and the points made above that competitor analysis is not a easy task but a necessity in to â-  Survive â-  Handle slow growth

The Asset-Attitude Approach (AAA) The Asset-Attitude Approach aims to bring new concepts to the competitive advantage. Assets directly relate to resources and capabilities. The AAA is important for the individual’s behaviour in the firm performance. A research could be discovered to shape strategy and finance. There is also an emphasized on innovations in the Asset-Attitude Approach in the following ways: (a) the investigation of the foundation of assets from the fresh substances create from alterations or reactions of other substances and (b) the reality of an similarity relationship between assets and attitudes.

Strategic Information Systems Plan

Information systems are using competitive advantage. Avison and Fitzgerald (1995) have defined that information systems can help to achieve competitive advantage:-

“Redefine the boundaries of particular industries,

Develop new products or services,

Change the relationships between suppliers and customers,

Establish barriers to deter new entrants to marketplaces

Avison & Fitzgerald 1995, Information Systems Development: Methodologies, Techniques and Tools 2nd ed. McGraw Hill, Maidenhead IS is to achieve the strategic business plan and to stay in market over competitors. the business knowledge feeds into a Strategic Information Systems Plan (SISP). The output of the SISP is a development which will also involve in modifying existing systems or developing new systems. All organisations be determined by on Information technology For the survival. example organisations like British Gas, British Telecom, the Power and Water companies having to manually calculate, millions of customer bills every month or quarter.

Strategic information technology

Information technology now has become the back bone of every business. Security in  IT empowered business  has been increasing. Information Technology can also add value to firm by reducing cost or increasing revenue. Strategic importance of information technology lies is   developing the concept “value chain” in organization by creating activities consist of elements such as suppliers, customers, production, finance etc. IT also transforms the value chain activities by lowering cost of   value elements or by product’s differentiation.  In any organization, Information technology is a source of competitive advantages in following ways. 1. When supplier becomes monopolist and IT is unique for customers.-switching cost of customer’s 2.When capital investment in IT increases resources. 3. When technology becomes as proprietary technology. 4 When Technical skills needed to build IT application              5. When Managerial skills developed to understand and exploit IT application to increase business operations Importance Without knowing the importance of information technology and information system, no company can survive in this era of competition example high street banks, central and local government. Large organisations could last no longer than 24 hours without IT and ARE support! There should be little wonder that attitudes to the development of information systems have changed over the years to a professionally managed, disciplined and planned approach.

GENERIC COMPETITVE STRATEGIES

A business tool which assists to know the situation of a business within its industry is form by generic competitive strategies. The strategy can be analysed to understand a competitive advantage of a company lies, with a view of survival. According to ‘Michael porter’ in developing and maintaining the competitive advantage, companies have to adopt one of the generic strategies: cost leadership, differentiation or focus.

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Cost Leadership

Company aims to out-price its competitors by reducing overheads or the fixed costs linked with manufacturing and distribution. It requires a focus on production and economies department. This strategy is introduced where customers have the chance to change supplier easily. Example A example of cost leadership is supermarket chains on everyday necessity goods. By introducing this strategy, marketing becomes less important. Benefits include raising hurdles for other competitors to enter into the market and easing the effect of fixed-cost rises across the industry.

Differentiation

This is implemented, where a product or service is emphasized to similar alternatives presented by the competition. In this policy a higher price is charged. This strategy is used where the company sees its significant creation compete as a more gainful benefit than simple cost leadership. Examples Coca-Cola, which separates by having a strong hold in market for its primary product, Sony which differentiates on quality or reliability of products. Customers attract to this strategy by giving additional for a superior quality by returning to another trusted brand. Its dependant heavily on marketing to keep the product reputation and raises the obstacle for competitors entering into the market.

Focus

This is marked at an exact group, for example cultural, economic, or age-related groups. The strategy employs either cost focus or differentiation focus within its specific group. For example ‘Saga holidays focus on a specific group of consumers, over 50’s.

Michael Porter come to know that combining of strategies is imaginable: combining market with differentiation. However other combinations are not easy now, due to opposition amongst cost reduction and value-added differentiation. Therefore, a company should maintain one main strategy for its long term competitive advantage.

Examples of competitive management:

Vodafone is launching iPhone as a competitor against o2.both have same functions and there is a difference in service given.o2 is providing its customers with more better options by providing the iPhone instantly, on the other hand Vodafone take longer than o2.but on the other hand, Vodafone is providing an option to bank with HSBC by which customer can get cash back from total amount.

The need for strategy is to expand product in very possible markets, for example KFC, McDonalds and other fast food chains have ruled all the continents. Due to conditions of life, and variation in life style around the world, there is quite a share to go for development, particularly in nations with huge residents, and high development rate.

Sony is a leading company in electronics; Sony achieved 70% turn over outside japan.its the most innovative company of japan.it is the only company which introduce first video cassette recorder and also the colour television. And with the time innovation continues for this company by inventing Walkman, still camera and video camera etc.so it gain a competitive advantage over its competitor Toshiba and Samsung by only innovation.

Motorola is the first company for launching broadband and wireless communication. And they bring a revolution in communication field. They also gain competitive advantage by innovation.

Lenovo is Chinese company founded in 1980..it is the third largest company after dell and hp.lenovo also IBM’s consumer electronic division in 2005.adn become the most eco-friendly electronics firm

CONCLUSION

According to the thorough study of management and competitive advantage, the company can get competitive advantage over its competitors, maximise their profit and plan for their future seccussfully,by creating an edge over its competitors.to get a competitive advantage takes strategic planning and extensive research,and after writing this report,it is now understood that the management process includes all the activities to help the organization to successfully adopts new information system and information technology to make business successful. There are five main things which the company always focuses and ready for them.folowing are the things:

 Focus on your specific market and know your competition

Learn from your competition and your customers

 Make an Economic Moat.

Keep the business on the cutting edge

 Use all resources of business information

Reference and bibliography

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