A company can gain competitive advantage and can achieve competitive edge if it adopts unique ways. The four most significant ways in order to create competitive advantage are as follows.
- Achieve superior efficiency
- Achieve superior quality
- Achieve superior innovation, speed, and flexibility
- Attain superior responsiveness to customers.
These four methods are considered as the building blocks of the competitive advantage. A company is regarded as a device that transforms inputs such as land, labor, capital, technological expertise and management into the outputs i.e., the goods and services. The simplest efficiency measure is the input, which the company takes in order to produce a specific output. A company is called efficient when its productivity is high but cost is low (Hill and Jones 119-156). So, in order to reduce the cost the company should consider economies of scale which help to spread the fixed cost over large volume of production. It also helps to achieve greater specialization and division of labor.
Further, for achieving the efficiency learning should be started again, when any changes occur in the production system of the company. The experience curve assists in this regard to know about the learning effects and economies of scale. It indicates the organized lowering of cost structure that takes place with product’s life. additionally, use of the flexible technology for manufacturing can reduce the setup time, improve the quality controls and ensures mass customization by reducing cost. Furthermore, by achieving superior efficiency material management become possible and holding cost can be decreased when materials received just-in-time in order to enter the production process.
Secondly, competitive advantage can be attained if superior quality is achieved. The company should ensure Total Quality Management i.e., the focus should be on improving the quality of product and service, by keeping the customer in mind. By measuring the quality, setting goals, creating incentives, improving the relations with suppliers, competitive advantage can be achieved. Moreover, in this regard there is Five Step Chain Reaction, which is proposed by Deming. The five points stated by Deming are that the improved quality decreases cost, improves productivity, increases market share, enhances profitability, and create more jobs (Srinivasan 163-164).
Innovation is the most important aspect for achieving competitive advantage; this is due to the fact that innovation help to develop a new product and this product satisfy the needs and wants of the consumers because it is made with the creative ideas.
Product differentiation strategy and proper positioning strategy should be adopted in this regard in order to differentiate the product from the rest of market players and competitors. Proper Research and Development should be ensured for developing new processes, products and for cooperating with other functions, particularly manufacturing, marketing and development processes. Furthermore for achieving speed and flexibility talented engineers and scientist should be hired.
Finally, a company should attain superior responsiveness to the customer by developing customer focus. This can be done by demonstrating the leadership, shaping the attitudes of employees and bringing the customers into the organization. The responsiveness can also help in creating competitive edge by satisfying the needs of the customers, customizing the product’s features in order to meet the requirements and needs of individual customers and groups. The reduction in response time, which can be assured by marketing and advertisement that communicates with the production, creating flexible material and production management and efficient information systems supporting processes, all help the company to gain competitive advantage over its competitors.
Hill, Charles W. L., and Gareth R Jones. Strategic Management: An Integrated Approach. 10th ed. Cengage Learning Canada, 2012. 119-156. Print.
Srinivasan, R. Strategic Management: The Indian Context. 4th ed. Delhi: PHI Learning Private Limited, 2012. 163-164. Print.