Obtaining a Competitive Advantage Is an Important Aspect of Management Today

Obtaining a competitive advantage is an important aspect of management today

because organizations exist in a more global environment than ever before. Companies that have achieved a competitive advantage typically excel in at least one of these dimensions. These dimensions are the product of an organization's competencies, resources, and capabilities. Here we examine how an organization seeks to build competitive advantage by developing competencies, resources, and capabilities to create superior efficiency, quality, innovation, and customer responsiveness.

Thus, in order to achieve a competitive advantage, a company must meet either or both of these conditions: have lower costs than its competitors or differentiate its product in some way so that it can charge a higher price than the competition.

1. Efficiency: Efficiency is measured by the cost of inputs required to produce a given output. The more efficient a company, the lower the cost of inputs required to produce a given output. Thus efficiency helps a company attain a low-cost competitive advantage. The most important component of productivity for most companies is employee productivity, measured by output per employee.

2. Quality: Quality products are goods and services that are reliable in the sense that they do the job they were designed for and do it well. This creates a brand name reputation for a company's products. This enhanced reputation allows the company to charge a higher price for its products. Higher product quality can also result in greater efficiency and hence lower unit costs. Higher quality means that less employee time is wasted making defective decisions.

3. Innovation: Innovation is creating new or improving goods and services that customers want. (Jones, 21) Management has to figure out how to form an environment that will inspire and permit the innovation to take place and come alive. Finding the right group, setting, and managing style is one of the most difficult aspects of innovations. Organizations compete for customers with their products and services; this is why training is important to employees. (Jones, 22)

4. Customer Responsiveness. Customer responsiveness is about being fast and right. The value of being right is obvious - customers get something that meets their needs. But the value also depends critically on the speed with which the response is produced. Maximizing performance across the two dimensions constitutes excellent customer responsiveness.