Cutting Costs Strategically
February 12, 2025
In previous articles, we have discussed how media affects society and effects changes in the way people think and act. This article looks at how the historical function of media as a watchdog and a purveyor of public good have now evolved to a point where the media sets the agenda for the country to […]
The Transformation of Marketing from Scaling to Un-Scaling The Twentieth century was all about mass marketing and marketing to scale wherein marketers were sure that consumers could be broadly categorized into specific patterns according to demographic, income, class, race, gender, and other categories. This in turn, led to marketing theories that sought to explain how […]
Relationship Marketing is being spoken of as one key Business Philosophies of the progressive Organizations who are Customer Oriented or Customer Centric. Companies have realized that to be successful on the long term trajectory of successful business, they need to be closer to the market, get under he skin of the Customer, anticipate his needs […]
Confronting a No-Growth Economy The main problem facing the global economy is that growth has stalled and excessive money printing has led to inflation. There is a saying which goes something like this, if you do not change direction, you are likely to end up in the same place that your life is taking you […]
There would be Anarchy without a well functioning legal and Judicial System For transacting business and commerce, laws and regulations are needed and more importantly, there needs to be a mechanism to enforce such laws and regulations. For instance, corporates cannot work without contracts between them and their employees, suppliers, shareholders, and other stakeholders. Indeed, […]
It is a truism that strategic management is all about gaining and maintaining competitive advantage. The term can be defined to mean “anything that a firm does especially well when compared with rival firms”. Note the emphasis on comparison with rival firms as competitive advantage is all about how best to best the rivals and stay competitive in the market.
Competitive advantage accrues to a firm when it does something that the rivals cannot do or owns something that the rival firms desire. For instance, for some firms, competitive advantage in these recessionary times can mean a hoard of cash where it can buy out struggling firms and increase its strategic position. In other cases, competitive advantage can mean that a firm has lesser-fixed assets when compared to rival firms, which is again a plus in an economic downturn.
We have defined what competitive advantage is as it relates to strategic management and the sources of competitive advantage differing from firm to firm. However, a firm can have a source of competitive advantage for only a certain period because the rival firms imitate and copy the successful firms’ strategies leading to the original firm losing its source of competitive advantage over the longer term. Hence, it is imperative for firms to develop and nurture sustained competitive advantage.
This can be done by:
The fact that firms lose their sources of competitive advantage over the longer term is borne out by statistics that show that the top three broadcast networks in the United States had over 90 percent market share in 1978 which has now come down to less than 50 percent.
With the advent of the internet, competitive advantage and the gaining of it has become easier as firms directly sell to the consumers and interlink the suppliers, customers, creditors, and other stakeholders into its value chain. Because of the removal of intermediaries, firms can reduce costs and improve profitability.
Essentially, the internet has changed the rules of the game and hence sources of competitive advantage in this digital era are now about how well firms utilize the digital platform and social media to gain advantage over their rivals.
Finally, competitive advantage has to be earned, gained, and defended as the preceding discussion shows. Hence, those firms that are agile and responsive to changing market conditions and whose internal capabilities are aligned with the external opportunities are those who would survive in the brutal business landscape of the 21st century.
As can be seen from the characterization of competitive advantage, it is ethereal and subject to change and hence firms must always been on the lookout for newer sources of competitive advantage and be alert for competitors’ moves.
Your email address will not be published. Required fields are marked *