Competitive advantage is defined as follows: when two or more firms compete within the same market, one of the firms has a competitive advantage over its competitor. It happens when the firm earns or can earn a constant high-profit rate. Competitive advantage comes from internal sources where a firm has greater innovative or creative or capabilities, and from external sources like the change of customer prices, and the change in technology. Changes in the external environment of a company open rooms for opportunities to profit.
From the definition, entrepreneurship is the power to respond to such opportunities (Hill, 2008). A number of the sources of competitive advantage are discussed below: the first is organizational culture. The organizational culture is the shared behavior, habits, beliefs, norms, mission, and symbols of an organization. It affects an organization in that it cannot achieve its goals if its workforce has no common purpose. When people in the same firm focus on negative politics, the firm will fail.
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The second competitive advantage is people. These are the driving force behind the majority of the competitive advantage. A company gets a competitive advantage when its people are better than its competitor's innovative, creative, and establishment relationships (Hill, 2008). Processes and practices also affect the competitive advantage in that if you have better methods of getting results, you can enjoy a competitive advantage.
The fourth source of competitive advantage is the capital and natural resources. Capital is mainly vital to old industries such as transport industry since it helps bring its projects to completion. In the new sectors such as IT industries, it's not very important. Technology is another primary source of competitive advantage since it includes industrial machinery, energy, transportation, and equipment. Technology is especially useful with tremendous industrial evolution. The last source of competitive advantage is the products and intellectual property. The product design can be a competitive advantage. However, the product design is straightforward for competitors to replicate. It is paramount to avoid this by applying intellectual property laws to protect the firm’s rights to product, technology, and process designs.
Performance improvement is made to increase organizational efficiency and effectiveness to improve its ability to deliver goods and services (Hill, 2008). It involves several steps, such as engaging your employees. This builds a strong understanding of the business strategy throughout the workforce. It also builds trust since employees know that their managers care about them. Each employee is also given a chance to use their skill hence high levels of self-direction. Another way to improve organizational performance is by leveraging high-impact leadership practices.
Communication is critical in today’s organizations, and many leaders have this challenge. This can be improved by having departmental and organization performance targets, progress, obstacles, and solutions. Leaders and employees could also engage in stories about competitors and customer successes; which could highly improve on the communication within the firm. Another way to enhance organizational performance is by identifying and removing internal roadblocks. You should look for your company's procedures, policies, and structure.
Aligning a company’s metrics can also go along way in improving an organization’s performance (Hill, 2008). The metrics people should focus on the need to be understood by them to be within their influence. They should guide through the decision-making processes, and prioritize work. Non-financial metrics relating directly to a firm’s competitive differentiation can help keep everyone aligned in a similar strategic direction. Explaining to the employees how metrics are chosen and measured can enable them to understand how they each make a difference in the performance of the company. Using training and development strategically can also go a long way in improving organizational performance. People should be trained well to enable them to perform essential work as employees approaching retirement age leave the firm.
People should also be trained in the future. The last way to have improvements in organizational performance is focused on the business strategy. The rule of thumb is best in determining where the company can r does excel. You could use customer intimacy; which is providing customization to meet each customer’s individual needs; which eventually builds strong, long-term customer relationships. You could also apply operational efficiency; which provides a universal set of products and services designed to be cost effective for customers. The last way you could focus on the business strategy is by providing new, innovative products and services provided the emergent technologies and practices.
The above improvements help leverage the organizational processes. This can be defined as the ability to identify and implement valuable change to processes (Hill, 2008). The improvement increases efficiency, productivity, quality, performance, as well as customer experience. This is possible since these improvements help in identification of the need for change. This s done by identifying the current issues or potential risks for your company using an audit. From this audit report, you can now be able to prioritize your areas for business improvement. Identification of the problem is followed by the analysis of the current process.
Once you have decided which process are to be improved, you then analyze the current procedure. This way, you can fully understand the process from A-Z and set realistic improvement objectives (Hill, 2008). The third step involves soliciting senior management commitment. The step is the most crucial element in the process because the success of the project depends on managerial support. You can now create an improvement strategy. You should include the broken steps in the process, why and how they should be improved, and any financial and resource implications. This helps leverage new business models since it helps evaluate where you currently stand. You then can compare how your competitor’s business model stacks up compared to theirs.
Information technology can help improve the organizational process. This is possible in the following ways: it helps improve its productivity. Technology allows businesses to enhance their production processes. This is possible by merely analyzing how the staff spends their time. You can also use technology to introduce processes which make your system more efficient. Through task management tools, you can stay on top of daily responsibilities, so you don't miss anything. Through IT, there is increased flexibility. You can now eventually with your colleagues at any given time regardless of location, thanks to the IT innovations. This can help improve the company’s flexibility to deal with queries quickly and efficiently (Kohli & Grover, 2008). This eventually enhances teamwork across the whole business; hence, it can meet its mission and vision. IT has also helped to better customer service. This is possible through interactive websites, online chat support services, and round the clock customer services across the social.
The interaction with your customers can help reduce competition and increase profits since through these platforms you and know what they want and deliver. IT also enhances your marketing. Technology has created software that allows businesses to develop a marketing plan; which can always be updated and shared with your team. You can build websites or use social media platforms such as Facebook, Twitter, and Instagram, which are great ways to promote your business (Kohli & Grover, 2008). You can also use Emails in marketing by reaching out directly to your customers with news, updates, and special offers.
Technology helps keep businesses safe since it allows companies to safely keep records as well as implementing systems that can only be accessed internally by the right people. This is way better than the manual record keeping, which caused many businesses problems because of the poorly maintained and stored records. These records stored technologically has encrypted passwords which give reliable security levels, preventing computer hackers from accessing data, and preventing private information from being leaked. Technology can change every aspect of the workplace and businesses, and it can help an organization meet its mission and vision in quickly.
Data is beneficial in an organization since it's at the core of any firm's decision making. Human resources directors gather data from online sources; which helps them determine the best people suitable for recruitment as well as confirm details about them. Through market segregation data, the marketing departments find customers who are willing to buy hence speeding up the sale-closing process. When data is effectively used by a company, it guarantees a streamline in the process of making a product and getting it to its customers. The manager of any firm should hence look for data and incorporate it into the business strategy.
Data can also effectively lead to smooth workflow technology (Kohli & Grover, 2008). Since global competition is a challenge that many businesses deal with, they should find ways to reduce their overheads and create new products and services. Use of workflow technology is one of the solutions to solve this problem. Some of the benefits of using workflows are that it highly promotes organizational change. The workflow management tool builds tasks, rules, roles, and steps into the organizational system. This hence causes less human involvement in the management of business processes. This workflow technology also helps in business process reengineering since it enables an organization to reevaluate and redefine their business processes.
A business model is always be based on the problems and needs of the customers. When coming up with new business models, we could use the old business model and call that business model innovation (Chesbrough, 2006). This is a positive change, renewal, or improvement of the business model. This could involve product innovation, process innovation, and marketing innovation. This has a high impact on the company since it works in various dimensions. The primary reasons why business model innovation is done include the following: for a company to come up with new product and technologies, it requires new business models (Teece, 2010). Digitization helps in the creation of new customer benefits, new products, or new data. This acts as the basis of the new business model.
When a company wants to develop new processes or products, it's required to come up with a new creative process. New business models also have the potential to enable a company to comes up with destructive and radical innovations. This, for example, is what has happened with Uber, which has turned the whole industry upside down thanks to new business models (Chesbrough, 2006). This has helped the company to become worth billions. For many industries, their products are already exhausted, and hence the minimal potential for any innovation. New business models can, however, help such companies extend their reach far uphill and have many innovations. This can include alternative sales opportunities or new value-added chains. New business models can also significantly help a company to be differentiated from the competition.
Many people in the market have similar business models but different services, products, and positioning. In the real sense, however, all tick the same way. Coming up with new business models that is different from the rest brings in a significant difference and so much competitive advantage. These companies can also create new markets. A company such as Apple has successfully done this. In conclusion, the only change in business models can bring the difference of a company from the masses (Chesbrough, 2006).
Technology has significant effects on the operations of a business. No matter the size of your business, technology has both intangible and tangible benefits that can help the enterprise make money and produce the results desired by its customers (Kohli & Grover, 2008). Technological infrastructure affects the efficiency, culture, and relationships of a business. It is paramount for a company to possess excellent communication with its customers. This is greatly affected by technology. Employees need to keep in touch with their clients consistently. This is made possible by platforms such as websites where customers can find whatever answers to their questions. This good interaction with customers significantly impacts a business positively since there is the creation of a stronger public image. Technology also makes operation more efficient. Through technology, a business can understand its cash flows and preserve time, which is a precious resource. With proper technology put in place, the executive of an enterprise saves money and time by holding meetings online instead of the usual way people hold a meeting (cooperate headquarters).
Through technology, there have been improvements in business culture and class relations, since employees of an enterprise located in different locations can easily interreact. A factory manager, for example, can freely communicate with the shipment coordinator at another location. This will reduce the likelihood of destructions or tension occurring. Technology also gives a business research capacity where it can research new opportunities and hence stay a step forward in the competition. Through technology, an enterprise can virtually travel to new markets without the cost of executive jets to take its employees on tours or the risk of creating a factory somewhere else. Technology also offers security to an organization, since many businesses nowadays are subject to vandalism. Technology has made it easy for enterprises to protect their confidential executive decisions, financial data, and any other kind of information that can lead to massive competition. This is possible through computer passwords.
To conclude, technology plays a critical role in achieving entrepreneurial success. In general, technology gives a business the competitive advantage (Porter, 2008). Technology can be used to seal the gap between technical people and business people. Business people, who use technology to gain competitive advantage, can work hand in hand with the professional people to achieve their goal. To design an information system which gives a competitive advantage, you would require to understand the business problems and the knowledge of the availability of the necessary technology to be used (Kohli & Grover, 2008).
Technology can also help a business in creative designing. This can help avoid coming up with standard designs. Bing is an example of companies that have implemented technology in creative designing. Although it uses the same technology used by Google in indexing and suggestion of data, Bing has added some value to its home page. Technology can also help an enterprise to view business problems from a different perspective. It helps business owners to view the business problems from the customers perspective. This is very useful in adding value to the business since, without the customers, the business cannot survive. Technology hence provides the owners with valuable information, which helps them understand the needs of their customers better. As a result, this results in the more effective use of resources to solve the problems of these customers, hence providing more value to the organization (Friedman,2007).
References
Chesbrough, H. (2006). Open business models: How to thrive in the new innovation landscape . Harvard Business Press.
Friedman, M. (2007). The social responsibility of business is to increase its profits. In Corporate ethics and corporate governance (pp. 173-178). Springer, Berlin, Heidelberg.
Hill, C. (2008). International business: Competing in the global market place. Strategic Direction , 24 (9).
Kohli, R., & Grover, V. (2008). Business value of IT: An essay on expanding research directions to keep up with the times. Journal of the association for information systems , 9 (1), 1.
Porter, M. E. (2008). Competitive advantage: Creating and sustaining superior performance . Simon and Schuster.
Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard business review , 84 (12), 78-92.
Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning , 43 (2-3), 172-194.
