Building a Competitive Advantage

The essay discusses strategies that manufacturing and service companies can apply to maximize their competitive advantage. When a firm can sustain profits that surpass the average for its industry, the company is regarded to possess a competitive advantage over its perceived rivals. The primary goal of most business strategies is the ability to achieve a sustainable competitive advantage. However, approaches differ in the aspect of time and the manner in which the management formulates them and carries out implementation. The theory of competitive advantage by Michael Porter will be used for analysis and examination of this task. Under Porter’s approach, four main strategies that include cost leadership, differentiation, defensive techniques, and alliances are discussed briefly (Porter, 2008). Cost is an effective strategy that occurs when a company offers the same quality service or product as its business competitors, but at a lower price. This technique is applicable when a firm finds methods of producing goods or offering services at a lower cost by utilization of its available resources in a more efficient way than its rivals do. According to Zekiri and Nedelea (2012), a company may gain cost advantage through appropriate implementation of the economics of scale, acquiring raw materials at a low price, low labor cost, and incorporation of the most efficient technology among other factors. On the other hand, the strategy of differentiation entails offering a different product, using a different marketing technique and platforms, and application of varying delivery system among other unique features.  The application of the defensive technique is that it allows the company to distance itself from its business rivals, thus maintaining a competitive edge it has gained through cost leadership and differentiation. Besides, Porter encourages firms to seek strategic alliances with other companies in related businesses. The strategic business alliance is essential since it provides an opportunity for both parties to increase their capital and brand awareness, without incurring extra financial resources or spending time. Also, business alliances generate indirect benefits such penetration through risky markets, breakthrough inventions, and ability to overcome local political barriers (Porter, 2008).

References

Porter, M. E. (2008). Competitive advantage: Creating and sustaining superior performance. New York, NY: Simon and Schuster. Zekiri, J., and Nedelea, A. (2012). Strategies for achieving competitive advantage. The USV Annals of Economics and Public Administration, 11(2), 63-73.