Competitive Advantage

The Competition: Maintaining Advantage

Maintaining competitive advantage in today's ever-changing business environment is not a simple task. For any company to maintain a competitive advantage, the company must develop the advantage such that it is "rare, costly to imitate, no substitutable, and nontransferable" (Snyman, J.H., 2006). Along these lines, Michael Porter has provided five competitive forces that can assist any company in maintaining the advantage. These forces are "the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among existing competitors' " (Pfeffer, J., 2005). Three methods for maintaining competitive advantage that will address these forces are effective strategic management, the effective management of people, and the effective management of research and development.

Dr. Johannes Snyman conducted a study of the trucking industry within the United States. Dr. Snyman concluded "in order to compete successfully in today's deregulated environment, trucking companies must continually evaluate and adjust their strategies. They must therefore not only pay attention to the content of strategy, they should also focus on the processes by which strategy is crafted" (2006). This could be said for any company in any industry.

Effectively managing people means "achieving success by working with people, not by replacing them or limiting the scope of their activities" (Pfeffer, J. 2005). Some firms that have gained and maintained a competitive advantage through the use of their people management are Circuit City, Tyson Foods, Wal-Mart, and Southwest Airlines (Pfeffer, J., 2005). In alignment with experts' suggestions on maintaining competitive advantage, effectively managing people is not easily imitated, can be rare, and is thus a great choice of how to keep the advantage.

Smith's Group used R&D to achieve and maintain competitive advantage. By having a strong R&D program, any company can stay ahead of the technology curve and bring to market exciting new products ahead of the competition. Depending on the caliber of the R&D group, imitating output may prove to be costly or impossible for the competition.

Evaluating Methods: Risks, Advantages and Disadvantages

Companies face dynamic challenges in making the decision to outsource work to other countries and geographical areas around the world. The driving forces' behind such decision making is often the amount of profitability, maintaining competitive advantage, and customer satisfaction. The author's will examine and evaluate methods, risks, advantages, and disadvantages of research and development, managing people, and strategic management within the global market place.

There are several common denominators that the advantages, disadvantages, and risk all have in common. These denominators cost, customer satisfaction, and achievements of goals. While each of the competitive advantages faces its own set of challenges these three denominators remain a constant.

Research and development is often a very costly endeavor. The relative geographical area may offer some constraint. Such constraints may include costly equipment expensive workforce, and cultural differences. In a recent study within the health care industry outsourcing research and development was evaluated. "Decisions concerning internal and external procurement are frequently taken for the short term, chiefly on a purely cost basis." (Fisher, 2005) In many cases the cost of medical equipment is extremely high. Thus avenues to research in geographical locations where resources are more plentiful and less expensive are often taken advantage of.

The risk of outsourcing any of these competitive advantages is the lack of understanding of the goal of the project. This lack of understanding may not give the company exactly what it was looking for. This could derail the potential to loose the competitive advantage. This misconception could simply come in the language used in the initial proposal. Customers may not be satisfied with the service they are receiving from persons outside of there homeland. Furthermore, management techniques may very greatly culturally and situations may not be diffused and resources may be used ineffectively.

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Constraints and Regulations

Strategic planning is one of the most important and vital aspects of a business. Strategic planning is tedious and complex, and usually has long terms affects on organizations (Morris and Jamieson, 2005). One major constraint of strategic management is that planned projects must have the support of the entire organization or the project is doomed to fail. Strategic plans must be clearly implanted into all roles within