Strategy and Competitive Advantages

Why talking about Strategy and Competitive Advantages?

It might look strange to encounter a section on “Strategy and Competitive advantages” in a website of a company dedicated to business process but it is not. The company strategy is too focus on Innovation and new products to gain Competive Advantages and People not pay the right attention to Processes. They are forgetting the full potential of implementing the right processes to support their strategy. Having efficient and well integrated Processes are one of the competitive advantages most difficult to copy.

Dynamic and agile organization and processes can create a competitive difference for a company that is in a “disruptive” stage. On the other hand, if the company is in a “Main Street” situation struggling with direct competitors, operational process innovations may be the primary means of gaining competitive advantage.

Some Definitions:

Competitve Advantage: a firm is said to possess a competitive advantage over its rivals When this firm sustains profits that exceed the average for its industry.

Strategy: this word is probbly one of the most used words in business. Some people might not agree with my definition, but for me, Business strategy is the plan how resources will be allocated to obtain long term objectives.

Business processes are actions that firms engage in to accomplish some business purpose or objective. Thus, business processes can be thought of as the routines or activities that a firm develops in order to get something done (Nelson and Winter, 1982; Porter, 1991)

Strategy to obtain Competitive Advantage

I will start by an historical review to understand why this concept was developed and what issues it tried to solve.

Since the mid-1970s, increasing competition and increasing size of companies created the need of performing new researches to understand how firm could obtain competitive advantage and sustains it. Studies first focus on the external environment and the action of competitors. The resulting strategies were to create an advantage in one or more of the 5 forces. The firms which were able to match their strengths with the opportunities in the external environment were able to secure a competitive advantage (Porter, 1985; Barney, 1991).

But this model reached is limit due to the lack of consideration regarding the internal environment and the unique resources and capabilities that a firm brings to the industry. Money was invested in activities which did not have a significant impact on return on investment for the company.

The core competency model was developed to solve this problem and to understand the most valuable component of the company.