In: Operations Management
F1) Strategic management is fundamentally the study of why some firms do better than others. In the search for strategic principles which have broad value, three business strategies were identified as providing the most value: (1) optimize efficiency; (2) respond rapidly to changing environments; and (3) develop inimitable resources and capabilities. Do you agree that following these three principles will create competitive advantage for a firm? Are there other principles which you have identified in your readings or studies?
Strategic management is defined as systematic process of identifying, selecting and implementing organisation’s long- term goals and objectives.Strategic management is fundamentally the study of why some firms do better than others. The company need to adopt a various progressive and aggressive strategies in order to deal in this competitive era.
Yes, I agree that following these three principles will create competitive advantage for a firm:
(1) Optimize efficiency.
(2) Respond rapidly to changing environments.
(3) Develop inimitable resources and capabilities.
(1) Optimize Efficiency: Optimize efficiency is defined as a phenomenon of using all the available resources efficiently that it will generate the best output. It shows the optimum utilization of available resources to enhance the productivity. When company uses available resources optimumly then it can be able to gain a competitive advantage. For example,
(2) Respond rapidly to changing environments: The environment is dynamic in nature and company need to upgrade its plan according to the dynamic environment. Dynamism has a deep impact on the growth of a company. It is necessary for the firm to identify the changing environment and the changing need of customers and develop their plans according to it.
For example,
(3) Develop inimitable resources and capabilities: Resources and activities which are difficult to copy brought advantage to the company. Difficulty in duplication of product makes the firm to stand more strong in front of others. One company differentiate with another company regarding its product and services. A company should ensure that its product and services are difficult to imitate. Therefore, it should use such kind of technology, processes and various activities that are difficult to be copied by others.
For example,
Other principles to gain competitive advantage are:
1.Product differentiation:Product differentiation is used to differentiate one company's product with another company's product in order to make it more successful. Product differentiation helps to highlight the key attributes and features of a product and present it in a different way in front of customers to make it more appealing.
For example: The Maybelline Colossal Kajal and the Lakme Eyeconic Kajal.These both are smudge free and dark kajal available at affordable price but Lakme offer product differentiation in its kajal such as the different colour shades whereas Maybelline offer only black kajal with dark and light color variation.
So this colour variation helps to gain competitive advantage to Lakme because the customer segment who wish to use the kajal of different colours will definitely opt to Lakme.
2.Product Cost:Product cost has a direct impact over the success of a firm.When two companies offer a similar kind of product that have the same level of quality and service to the customer then the cost is the major differentiable factor that determines the success.
Such kind of intense competition over a product cost can be seen in the beauty apparel industry. For example,let us take two major beauty product producing companies: Lakme and Maybelline. Both offer a similar kind of product such as Mousse Foundation, Foundation,Lip colours,Colossal Kajal etc. But the offered price makes the customer move to pick the product offered by two companies. When a customer needs to select between the lip colours offered by the Lakme and the Maybelline, the price that companies offer to the customer acts as a major motivator.
3.Training and development: A well-trained employee works more efficiently and quickly as compared to an untrained employee. To gain a competitive advantage a company need to follow a proper strategic plan for training and development of employees. Investment in training and development of employees help to maximize the profit as well as to retain the employees.
4.Focused Differentiation: This methodology focus on a selected customer segment by providing a unique featured product. It helps to enhance the utility derived by focused customer segment.
For example, Restaurant focused on group of Vegan consume segment and offers special kind of food to them.
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