Porter 1985 Competitive Advantage Pdf Download ((FREE)) __TOP__

This article aims to help general managers respond to the challenges of the information revolution. How will advances in information technology affect competition and the sources of competitive advantage? What strategies should a company pursue to exploit the technology? What are the implications of actions that competitors may already have taken? Of the many opportunities for investment in information technology, which are the most urgent?

We discuss the reasons why information technology has acquired strategic significance and how it is affecting all businesses. We then describe how the new technology changes the nature of competition and how astute companies have exploited this. Finally, we outline a procedure managers can use to assess the role of information technology in their business and to help define investment priorities to turn the technology to their competitive advantage.

Linkages also require activities to be coordinated. On-time delivery requires that operations, outbound logistics, and service activities (installation, for example) should function smoothly together. Good coordination allows on-time delivery without the need for costly inventory. Careful management of linkages is often a powerful source of competitive advantage because of the difficulty rivals have in perceiving them and in resolving trade-offs across organizational lines.

Linkages not only connect value activities inside a company but also create interdependencies between its value chain and those of its suppliers and channels. A company can create competitive advantage by optimizing or coordinating these links to the outside. For example, a candy manufacturer may save processing steps by persuading its suppliers to deliver chocolate in liquid form rather than in molded bars. Just-in-time deliveries by the supplier may have the same effect. But the opportunities for savings through coordinating with suppliers and channels go far beyond logistics and order processing. The company, suppliers, and channels can all benefit through better recognition and exploitation of such linkages.

Competitive scope is a powerful tool for creating competitive advantage. Broad scope can allow the company to exploit interrelationships between the value chains serving different industry segments, geographic areas, or related industries. For example, two business units may share one sales force to sell their products, or the units may coordinate the procurement of common components. Competing nationally or globally with a coordinated strategy can yield a competitive advantage over local or domestic rivals. By employing a broad vertical scope, a company can exploit the potential benefits of performing more activities internally rather than use outside suppliers.

By selecting a narrow scope, on the other hand, a company may be able to tailor the value chain to a particular target segment to achieve lower cost or differentiation. The competitive advantage of a narrow scope comes from customizing the value chain to best serve particular product varieties, buyers, or geographic regions. If the target segment has unusual needs, broad-scope competitors will not serve it well.

For most of industrial history, technological progress principally affected the physical component of what businesses do. During the Industrial Revolution, companies achieved competitive advantage by substituting machines for human labor. Information processing at that time was mostly the result of human effort.

Finally, the new technology has a powerful effect on competitive scope. Information systems allow companies to coordinate value activities in far-flung geographic locations. (For example, Boeing engineers work on designs on-line with foreign suppliers.) Information technology is also creating many new interrelationships among businesses, expanding the scope of industries in which a company must compete to achieve competitive advantage.

In any company, information technology has a powerful effect on competitive advantage in either cost or differentiation. The technology affects value activities themselves or allows companies to gain competitive advantage by exploiting changes in competitive scope.

As information technology becomes more widespread, the opportunities to take advantage of a new competitive scope will only increase. The benefits of scope (and the achievement of linkages), however, can accrue only when the information technology spread throughout the organization can communicate. Completely decentralized organizational design and application of information technology will thwart these possibilities, because the information technology introduced in various parts of a company will not be compatible.

3. Identify and rank the ways in which information technology might create competitive advantage. The starting assumption must be that the technology is likely to affect every activity in the value chain. Equally important is the possibility that new linkages among activities are being made possible. By taking a careful look, managers can identify the value activities that are likely to be most affected in terms of cost and differentiation. Obviously, activities that represent a large proportion of cost or that are critical to differentiation bear closest scrutiny, particularly if they have a significant information-processing component. Activities with important links to other activities inside and outside the company are also critical. Executives must examine such activities for ways in which information technology can create sustainable competitive advantage.

In addition to taking a hard look at its value chain, a company should consider how information technology might allow a change in competitive scope. Can information technology help the company serve new segments? Will the flexibility of information technology allow broad-line competitors to invade areas that were once the province of niche competitors? Will information technology provide the leverage to expand the business globally? Can managers harness information technology to exploit interrelationships with other industries? Or, can the technology help a company create competitive advantage by narrowing its scope?

The management of information technology can no longer be the sole province of the EDP department. Increasingly, companies must employ information technology with a sophisticated understanding of the requirements for competitive advantage. Organizations need to distribute the responsibility for systems development more widely in the organization. At the same time, general managers must be involved to ensure that cross-functional linkages, more possible to achieve with information technology, are exploited.

Porter's (1985, 1998) activity level analysis tool, the value chain, is widely cited by academics, taught in classrooms, and applied by practitioners. Porter (1985, 1991) claims that drivers within the value chain are central to gaining firm-level competitive advantage; however, he does not consider reputation as a driver. This paper seeks to reconcile Porter's view of reputation with the literature on competitive advantage in knowledge intensive firms. We argue that reputation meets the criteria to be labelled a driver of knowledge intensive firms as it is a relative and relational property of the firm's activity set, impacts the firm's competitive position, and is indirectly controllable by management. The paper concludes by discussing potential implications of labelling reputation as a key driver of knowledge intensive firms.

Low-cost strategy emphasizes producing standardized products at a very low per-unit cost for consumers who are price sensitive [28]. According to Griffin [31], low-cost strategy is a strategy in which an organization attempts to gain a competitive advantage by reducing its costs below the costs of competing firms.

It is worth mentioning that even differentiation strategy does not defend the firm strategy from imitation by competitors forever, and David [34] wrote that differentiation does not guarantee competitive advantage, especially if standard products sufficiently meet customer needs or if rapid imitation by competitors is possible. According to him, successful differentiation can mean greater product flexibility, greater compatibility, lower costs, improved service, less maintenance, greater convenience, or more features.

Porter [18] stressed that if firms want to have a strategy in order to achieve a competitive advantage they should pursue three strategies, that he called generic strategies. In accordance with his result and based on the empirical results of this study, Eq. 6 is presented, which shows the participation of each strategy in firm performance.

On the contrary, a firm that pursues differentiation strategy in the short- and long-term period enables to increase the firm performance. In the short-term period, this method brings profit to the firm as a result of the competitive advantage that is provided by a unique product/service with higher quality than competitors. In the long-term by pursuing the differentiation strategy provides an added value of all industry. As a consequence of strategy imitation by competitors provides a higher quality of product/service that leads the industry on a higher level of quality. By analyzing very clearly, how works this strategy and what advantages it will bring in the industry? It can be explained as: the main objective of the organization managers and strategists is increasing the firm performance over time, but the existing of numerous competitors makes it not easy to achieve it. In the competitive market, the way that firm managers follow to achieve the objective is product/service differentiation, by trying to create something unique in order to be attractive for consumers. This uniqueness can be done by increasing the existing product/service values that are present in the market or bringing new and better products/services in the market. Both of these ways set a higher value of products/services in the industry. 2b1af7f3a8