Further, relatively high competition in this industry is another reason why these companies should focus on strong marketing teams and solid customer service. It therefore should, according to Grant 1996 , be the main focus of companies to improve their knowledge integration. Within this latter framework there is an emphasis on knowledge as a fundamental resource and on knowledge integration, which is separately discussed. Production capabilities By the selection of its own design, and price advantage 20% to 30 % below other distributors , it has the ability to purchase from currently approximately 1800 suppliers from around the world, thereby ensuring the best prices flow onto the customer. Key Strategic Issues Corporate Culture Web Privately-held home products retailer.
We did not manage time properly. In order to clear its excessive inventory, the firm has focused on developing its online business Direct-To-Customer approach , which has been a successful strategy. Procurement: Procedures to find the highest quality inputs, purchase of highest quality replacement parts, strict standards for suppliers. When is there a threat from substitutes? Most of its products are self-assembly, and they are intended to be replaced more often, comparing to traditional style furniture that usually last longer and sometimes are passed down as a heritage. Even though competitive parity is not the desired position, a firm should not neglect the resources that are valuable but common. Grant also mentions a few factors that influence the integration process.
Rare Resources that can only be acquired by one or very few companies are considered rare. However, if it does not work to exploit an opportunity or mitigate a threat, it is a weakness. Tangible resources: To be able to gain competitive advantage against its competitors, a company in this industry also needs state of the art technology and high quality production processes. The resources that cannot meet this condition, lead to competitive disadvantage. One company may end up having little or no power in its own industry if there is a variety of quality products are offered in the market in direct competition with it.
The first and most important aspect is the market. If done successfully, the company can enjoy a period of sustained competitive advantage. There are many components to this question of organization. Although it entered in this segment in the year 1943 in Sweden but very quickly it expanded its operations in the markets of China as well. The level of imitations by other firms depends on the cost factor also. Formal control systems can consist of budgeting and reporting activities that keep top management informed of decisions made by employee's lower down in the firm.
It may allow them to find a niche in the market which will allow them to gain a competitive edge and possibly gain more market share in the long run. I think it is because…. As of 2008, it was the biggest retailer of furniture in the world. If the cost of acquiring the resources is less or negligible, the firms will try to imitate the competitive advantage to gain competitive parity. Customer, Customer service, Economics 755 Words 4 Pages 1. It is important to continually review the value of the resources because constantly changing internal or external conditions can make them less valuable or useless at all. Technology: Easy-to-use production technologies, investment in technology that improves production efficiencies.
I have cited all sources from which I used data, ideas, or words, either quoted directly or paraphrased. Firms with rare resources and capabilities that are hard to imitate by other firms gain a competitive advantage in the marketplace. But why is the Sweden-based company so successful? Resources are also said to be valuable if they help the firms to grow perceived customer value. If there are more companies competing with each other, the resulting competitive pressure will mean that prices, profits and strategy will be driven by it. There are two conditions to be satisfied for rarity to hold a competitive advantage in a firm. Composition of Forces Within each industry, the effect of different forces will be different. It achieved international expansion in three major phases and now operates large warehouse showrooms in Sweden, Norway, Denmark, Holland, France, Belgium, Germany, Switzerland, Austria, Canada, the United States, Saudi Arabia, and the United Kingdom.
The firm will hope that this process results in a competitive advantage in the marketplace they operate in. The furniture giant relies in its catalogues extensively for marketing and sales and more than 200 million catalogues are printed each year globally. WalMart is less stylish but has a wider range of products and for some it is considered more expensive. However every one is a potential customer. Out of 28 markets in total, e-commerce sales is currently available in 14 markets. Even at age five, it is documented that through the resale of matches throughout the city of Stockholm, Ingvar was profitable displaying a knack for appeasing customer needs.
Even under the adverse economic situation, Service Quality and customer visiting in Greece remain in high levels. He was very clever in utilizing his resources - he delivered his goods by bicycle, and later used the local milk delivery. Need for product offering modification. For financial resources, there are many detailed financial indicators that assess the financial condition or performance of the firm from different perspectives. As his business grew, he expanded to selling fish, seeds, Christmas decorations and eventually, pencils and ball-point pens which were a new phenomenon in 1935. Generally, this exploitation of opportunity or mitigation of threat will result in one of two more outcomes: an increase in revenues or a decrease in costs or both. Recognizing that Nike has had stable growth in its dividends and the fact that the firm recently announced a stock re-purchasing program, we can conclude that the firm is sitting on large amount of cash, which indicates that the firm is giving back to its investors and that they are able to continue its growth strategies, through acquisitions, product development and technology improvements.
A public company has access to more capital, and its existence is more guaranteed comparing to a company that is being held private. He hereby anticipates a closely related model of dynamic competences and capabilities by Teece 1997. There is also no threat of substitutes and the power of suppliers is also generally benign. Bargaining Power of Buyers When buyers have the power to affect prices in an industry, it becomes an important factor to consider for a company. Therefore when the company is looking for suppliers, it knows about the type of suppliers, and where it should be looking for. With a 14% share of the market in America , there is huge opportunity for growth via a continued marketing campaign to leverage off its brand, differentiating itself from other distributors by highlighting it's unique price and business acumen.
A firm's resources and capabilities must be both short in supply and persist over time to be a source of sustained competitive advantage. There is no competitive advantage since the rarity factor does not exist in these cases. There are thousands of firms competing with each other extensively. If the resource is valuable and rare and not expensive to imitate it, then the firm has a temporary competitive advantage. Strategic Management and Competitive Advantage: Concepts. Compensation policies let firms give incentives to their employees to motivate them and make them work harder.