Essay Sample on How Business Build and Sustain Competitive Advantage

Businesses build and sustain competitive advantage through different approaches depending on the strengths and weaknesses of the firm as well as the industry and environment. For firms to be said to have a competitive advantage they must have a strategy in place that makes them have an upper hand as compared to its competitors. As per Porter's generic strategies, businesses develop competitive advantage through identification of areas within the value chain where they can focus on and continuously continue to improve on it (Porter 2008). Some of the key areas of focus in generic strategies include; cost leadership, economies, and diseconomies of scale, product design or process, differentiation, and focus strategies.

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Most of the firms that leverage on economies of scale as their competitive advantage are large regarding capital, assets, and distribution (Pisano 2015). Such firms often develop the competitive advantage by raising the high amount of capital at the time they enter a market and they sustain their competitiveness by continuously engaging in large-scale projects, or they can continuously remain competitive by increasing their financial strength through a sale of shares. Therefore, firms that leverage on economies of scale often maintains their competitiveness by continuously expanding their production capacity as well as their distribution network. Other companies my develop their competitive advantage through cost leadership where they focus on the company's overall supply chain to improving efficiency while at the same time cut the cost of operation. Perhaps, the main area of focus in cost leadership is a cost (Agnihotri, 2013).

Operations as well as the entire supply chain of the company are streamlined to ensure that operation cost is lowered as much as possible to allow the company to increase its profit margin. Firms that focus on cost leadership as their area of competitiveness sustain their competitiveness by continuously developing best production mechanisms that make its operations smooth and efficient thus put them at an upper hand as compared to its competitors. Differentiation is another strategy that some companies leverage on when designing their competitive advantage. In as far as differentiation is concerned firms develop unique products that are completely different from their competitors' products concerning appearance, design, and packaging. When a company's product is highly noticeable/differentiable from that of its competitors they gain popularity in the market. Thus customers can easily identify them (Pisano, 2015). Companies that employ differentiation as their competitive advantage often maintain their competitiveness by continuously developing strategies that make them unique in the market, and they can achieve by developing unique packaging, distribution, or design strategies and in so doing they will continuously remain competitive.

According to Harley and Davidson's case, the company developed its competitive advantage by building a strong brand that is competitive as compared to those of its competitors. Harley and Davidson maintain its competitive advantage through its cult brand approach which makes its brands competitive because it is not only popular, but it is competitive as well. For firms to sustain their competitiveness, they have to take into account factors such as technological changes, environment, and legislation since a change in any of the component without a corresponding strategy from the company to address them put the company in danger of being faced out of the market (Agnihotri, 2013). For companies to maintain their competitive advantage, they must factor in emerging technologies because through them they can gain even further competitiveness.

Strategic Positioning and Operational Effectiveness

It is important for businesses to focus on their strategic positioning rather than concentrating on their operational effectiveness. Strategic positioning can be defined as the overall intended approach to the company's operation as well as its future. Strategic positioning complements operational effectiveness because it not only draws a picture of where a firm will be in the future, but it also ensures that production strategies are well designed to be in line with the positioning (Pisano 2015). Through strategic positioning, an organization may create value for itself by putting in place strategies that will see the firm improve continuously while incorporating changes in the environment as well. There are two key approaches that firm can employ while creating value for itself through strategic positioning, namely; low cost or premium price. In the low-cost approach, a firm streamlines its operations to ensure that it reduces its cost of operations while at the same time it gains operational efficiency.

According to Porters' generic strategies, a firm can create its competitive advantage through lower cost structures as well as through differentiated service or a product (Porter 2008). A firm can, therefore, create value for itself by leveraging on strategic positioning whereby it can focus on improving quality and through cost reduction. In as far as quality is concerned; a firm may focus on strategies that will create the best product for the company in the future as compared to that of its competitors. Although the definition of operational effectiveness may be seen as performance of tasks in a better way or production of products that are better in term of quality as compared to that of competitors, parameters of measuring firm's competitiveness should be based on the firm's strategic position under which the standards may be high (Agnihotri 2013). Therefore, it is clear that strategic positioning complements operational effectiveness or vice versa because their goals intertwine. For instance, a firm's operational effectiveness may include the production of quality products within a given set timeline and with reduced cost. Such a goal is well defined, and it complements strategic positioning of the firm if it seeks to achieve operational efficiency as compared to its competitors.

In principle, both operational effectiveness and strategic positioning serve the same purpose only that one is more focused on internal issues of the firm -operational effectiveness while the other is focused on the firm's position in the market and the industry both now and in the future -strategic positioning. As per Porter's position with regards to achieving operational effectiveness, generic strategies can be utilized where a firm will focus on only one area that it wants to achieve more success and thus strategically position the firm in the future (Porter 2008). Firm's strategic positioning strategies that majorly focus on internal issues of the firm can be seen as part of the means of achieving operational effectiveness. In the case of Samsung, the company's turnaround came about when the company redefined its strategic positioning where the management set to make the company the largest electronic company in the world by reducing its cost of production while at the same time improving the quality of its products.

References

Agnihotri A. 2013. Turnaround of Harley Davidson -Cult Brand or Strategic Fit Approach? Journal of Strategic Marketing, 21:3, 292-301, DOI: 10.1080/0965254X.2013.768689

Pisano G. P. June, 2015. You Need an Innovation Strategy: Despite Massive Investments Management Time and Money, Innovation Remains a Frustrating Pursuit in Many Companies. Harvard Business Review.

Porter, M. E. (2008). Competitive strategy: Techniques for analyzing industries and competitors. Internet Source.