Company’s competitive advantage most likely to endure over time Essay Example

a competitive advantage through a lower cost structure.

Second, when a company's product is thought to have a both quality as excellence and reliability it gains competitive advantage in the market and customers are willing to pay more to own it or consume it.

Third, when a company has both product innovation and process innovation the company has a competitive advantage. Product innovations are new products that the company introduces into the market that have superior attributes to existing products. Process innovation is a set of new processes to help in the production and delivery of products to the customers.

For example, Toyota put in place a lean production system which helped to boost employees productivity, thus giving Toyota a cost-based competitive advantage (Hill & Jones, 2010, p 88-89). Lastly, customer responsiveness is achieved by identifying and satisfying a customer's needs quickly. Customers find a value in quick responsiveness and this helps to build a competitive advantage for the company.

• How would you characterize the business model of Southwest Airlines?

I would characterize Southwest Airlines business models as being very efficient, team and customer oriented. Southwest Airlines has lowered their cost structure by using employees efficiently and productively, while having fewer than its competitors. They flight point to point versus having many hubs at different airports which lowers cost structure as well.

• How does this differ from the business model used at many other airlines, such as United and American Airlines?

United and American Airlines do not seem to be as efficient or customer related.

Both airlines have a much lower employee-to-passenger ratio, they both

fly a varied of different airplanes, have a lot more employees and hubs. All of these items make for an inefficient and costly operating structure.

Closing

Identify the resources, capabilities, and distinctive competencies of Southwest Airlines. Southwest Airlines tangible resources are their Boeing 737's, employees, and their few hubs. Their intangible resources are their brand name, reputation, and the training and knowledge of each employee.

Their capabilities are the company's skills in running an effectively efficient airline, even during the industry slump, the hiring system used to hire new employees and the motivating of their employees to work hard and pitch in where they are needed. Distinctive competencies of Southwest Airlines are the ability to use their resources and capabilities effectively. These distinctive competencies shape the strategies that Southwest Airlines is trying to achieve, which leads them to competitive advantage and superior profitability.

Southwest Airlines has superior profitability because they are able to differentiate their services by lower airfare, better on time schedule, travel routes that do not route passengers through hubs and take them directly to their destination, and a flexible and motivate workforce.

• How are the four generic building blocks of competitive advantage related to each other?

Each of the four generic building blocks is directly related to lowering cost structure of a company, increase competitive advantage and increase profitability.

• What role can top management play in helping a company achieve superior fficiency, quality, innovation, and responsiveness to customers?

Top management must be the foresight of the company and be willing to accept input from any source that proves to be of benefit.

If superior efficiency is to be achieved, managers must know the extent of the economy of scale as well as where the diseconomies of scale start. Managers must carefully monitor the efficiency of manufacturing to ensure superiority. For managers to achieve superior quality the product must be a high-quality product that is reliable and must also be seen to have superior attributes by the customer.

In order to achieve this there must be a philosophy that mistakes, poor quality and defects are not acceptable and need to be eliminated. Managers need to improved the working environment; better training and update skill levels and ensure that if there are any problems that employees will feel comfortable reporting them. For managers to achieve superior innovations they need to help create new products that satisfy customer needs, improve the quality of existing products, or create a process to reduce the cost to make the product that the customer wants.

By doing this it will give the company a major competitive advantage that can allow the company to differentiate its products and charge a premium price. It can also lower the cost structure of the product below the rivals product. For managers to achieve superior responsiveness to customers they must figure out how to give the customers what they want, when they want it and at a price the customer is willing to pay. By doing this the manager is helping the company to build brand loyalty which in turn gives the company pricing options.

•  In what sense might innovation be called the single most important building block of competitive advantage?

A company that

is continuing to create new products that are driven by customers, to satisfy the customer's need, improving the existing products, or reducing the cost it takes to make the products that the customers want is extremely important to do if the company wants a competitive advantage. Customers are always looking for the next best product and in order for a company to keep its competitive advantage, they must continue to commit to innovation.

When a company has a competitive advantage it differentiates their products and allows the company to charge a premium price thus driving up profits.

• What are the benefits of eliminating the longstanding policy at Matsushita that different divisions should be allowed to develop the same basic product?

By eliminating the internal competition it decreases the cost structure on the development of the new product and increased efficiency in the company. The input was too high for the output result prior to eliminating the policy.

• What do you think were the benefits of lifetime employment at Matsushita?

It creates a competitive work environment for promotions and wage increases. Employees would consistently have to prove themselves to be worthy of the promotion or wage increase. Another benefit, for the employee, would be that they had job security. They knew that they would not be laid off or let go.

• Why then did Nakamura effectively end this practice?

Due to earning and market share dwindling for years, Nakamura needs to make some changes in this company to be more efficient and bring back the competitive advantage.

One place to start was with eliminating lifetime

employment.

• What benefits did he realize for Matsushita by doing so?

He reduced the cost structure of their products by reducing the workforce by 19% and using robots on the line to improve productivity. This and other changes ultimately increase Matsushita's profits and shortened the production cycle. The company had gone from losing $3. 7 billion in 2002, to making profits of $1. 37 billion in 2006 due to the efficiency changes that Nakamura made in the company.

• What does the Matsushita example tell you about the importance of functional-level strategies for competitive advantage?

When a company stays stagnant without improving the company's effectiveness to operate they lose market share, have poor profits and poor employee morale. In order for companies to maintain their competitive advantage, they need to keep improving the effectiveness of the company's operations, attain superior efficiency, quality, innovation, and customer responsiveness. Sometimes making changes is tough but they need to be done to obtain profitability and competitive advantage.