Competitive advantage and sustainable competitive advantage
All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved. By Sun Tzu
Tactics may represent a brief competitive advantage. Strategy might signify a constant competitive benefit.
An organization must implement a set of competitive advantages which can maintained and required for the customer, fulfilling their requirements with the goal that they will pay for the value to contend adequately in the worldwide condition.
Value chain analysis is a capable instrument for the organization to distinguish its important actions as having the capacity to finish competitive need and make predominant routines. The value chain has been utilized as an intense tool for management as it comprises of the various activity the company uses to produce value and its profit. (Edwards, 2002)
Value Chain
The idea of the value chain is based on the process view of JULIA JUICE, the idea of seeing a JJ organization as a system, made up of subsystems each with inputs, (mindtools, 2017) Conversion procedures and productivities. Inputs, conversion procedures, and productivities include the procurement and utilization of assets - cash, work, materials, hardware, structures, land, organization and administration. How value chain exercises are executed, decide expenditures and generate benefits.
Regarding Porter (1985), the required things to do are:
1. Incoming Logistics -
According to Porter (2013), competitive strategy is used to assist company to have an effective cost in the production and profitable. Besides that, it is to maintain or enhance the position of company in the market by determine competitors of industry. The competition among is good for customers because each company would make an efforts to increase performance in the market like innovations, creativity, and also offer customers additional value which make difference from other company. His frameworks consist of five elements which are shown in figure 1below.
Value chain is a set of activities a company performs in order to provide a valuable solution to their customer problem in their market space or industry. The value chain is made up of primary and support activities. Primary activities being research and development, production, marketing and sales and customer service. These are the primary steps that are required to get a product or service to market to solve the customer problems. Some of the secondary steps include company
A value chain analysis is a strategic analysis of an organization that uses value creating activities (Dess, McNamara, & Eisner, 2016, p. 76). The value chain analysis describes a company’s activities and relates them to an analysis of the competitive strength of the company
Value chain is the ability to take a product and add some value along the way to make it appealing to the customers in such a way that they be willing to buy the product at a certain price. Many companies in today’s business world analyze their value chains to identify the ways which continue to attract their customers. The value chain analysis consist of two parts, primary activities and secondary activities. The first ones support the actual physical process of buying, manufacturing, shipping and selling the product and the secondary activities are actions that support the process, such as procurement, technical support and human resource management.
Value chain is the ability to take a product and add some value along the way to make it to appeal to the customers in such a way that they be willing to buy the product and pay the asking price. Many companies in today’s business world analyze their value chains to identify the ways which continue to attract their customers. The value chain analysis consist of two parts, primary activities and secondary activities. The first ones support the actual physical process of buying, manufacturing, shipping and selling the product and the secondary activities are is actions that support the process, such as procurement, technical support and human resource management.
Keane (2008) stated to design, manufacture, promote, offer and facilitate its product or services, all organization engages in some activities. All of these activities of an organization are shown through the use of value chain process. The manner in which organization performs its varying activities along with the firm’s value chain mirrors the organization’s background, strategy along with the way in which the organization executes its strategy. Ponte (2008) stated that the analysis of value chain of an organization is used to develop the organization’s competitive strategies along with formulation the connected and interconnectedness between all the organizational activities that formulate value. Francis, Simons, and Bourlakis (2008) stated that value chain analysis is a helpful tool as an organization looks to attain competitive advantage. Furthermore, Rieple and Singh (2010) stated that a value chain is a useful tool in conceptualizing the varying activities
Value chain analysis looks at every step a business goes through, from raw materials to the eventual end-user. The goal is to deliver maximum value for the least possible total cost. It is a systematic approach to examining the development of competitive advantage. The most basic breakdown of primary functions includes inbound logistics, operations, outbound logistics, sales and marketing and service. People should use the other models and frameworks within this software to further differentiate between, and add to, these domains. Product Innovation is one area that is not normally included in the de jure model but is often included in the de facto model. Value Chain Analysis describes the activities that take place in
Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland III, A. (2012). Crafting and executing strategy the quest for competitive advantage concepts
1. What is competitive advantage, and how does it relate to a company’s business model?
Competitive advantage is a very general but genuine term in the present business market. The business market is very competitive. One has to be very unique as well as customer satisfying in order to sustain in the market for the long run. “A competitive advantage is an advantage gained over competitors by offering customers greater value, either through lower prices or by providing additional benefits and service that justify similar, or possibly higher, prices” (Ehmke, 2008). (Porter, 2008) “Competitive Advantage introduces the concept of the value chain, a general framework for thinking strategically about the activities involved in any business and assessing their relative cost and role in differentiation.” It can be in various aspects of
A value chain is a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market. The concept comes from business management and was first described and popularized by Michael Porter (Porter, 2013)
Value chain is an approach to know how an item or activities create value for consumers. The most of value provides to consumers, the most of competitive advantage an organization build. In this analysis, value chain model has separated into primary and support activities. Primary activities are included in the physical creation of the item and service. On the other hand, support activities give the inputs and infrastructure that enable the primary activities to happen. This value chain model can be refer to below figure 5.
The value chain analysis (shown in appendix) was also generated by Michael Porter. This model is referred to “identifying ways to increase the efficiency of the chain” (Investopedia, n.d.). Furthermore, the overall objective is to produce maximum value with minimum total cost and establish a competitive advantage.
Competitive advantage is explained by Mahoney and Pandian (1992) as the function of industry analysis, organizational governance and the firm’s effects in the form of resource advantages and strategies. In order for a firm to be competitive it must adapt to the volatile business environment and through strategic management decisions establish a competitive advantage that will ultimately produce superior performance relative to its competitors (Akimova 2000).
Value Chain Analysis describes the activities that take place in a business and related to the business core competencies. It can classify by primary activities and supporting activities.