Question

There are six resources of cost advantage for firms. Identify three of these sources and provide examples for each

Answer 1

Six resources of cost advantage are: People, Organizational culture and structure, Processes and Practices, Products and Intellectual Property, Capital and Natural Resources and Technology.

People: Your people are the most important driving force competitive advantage. If your people are better at innovating, creating, producing and establishing relationships you may achieve competitive advantages. The competition might be able to replicate your products but the innovativeness cannot be replicated.

Organizational Culture and Structure: Organizational culture is the shared habits, behavior, beliefs, mission, norms and symbols of the organization. The firm can have the best and brightest workforce but if they lack a mission then it will not succeed. All the people in an organization should put all their energy into positive results and not focus on negative politics. An effective culture focuses the energies and abilities of the people on producing meaningful results.

Products and Intellectual Property: The design of a firm's products can be a competitive advantage. However, this is typically easy for competitors to replicate. So, with the help of Intellectual property laws, a firm can protect its rights to product, technology and process designs.