There are several factors that can contribute to a firm’s ability to be competitive in its industry. Building blocks of a competitive advantage include efficiency, quality, innovation, and responsiveness to customers. A firm with a competitive advantage may experience higher profits than the average profit in the industry while competing for the same customers. In the case of Honda, this is true. Honda has many distinctive competencies based on its resource and capabilities that allow it to have a competitive advantage in the auto manufacturing industry. Three areas that give Honda a competitive advantage in the auto industry include Honda’s engineering and design, research and development, and brand equity. Honda is unique in that its corporate structure is made of three companies. Honda Research and Development is in charge of research and development of innovative products for the company. Honda Motor produces, sells, and services the all Honda products. Honda Continue reading
Strategic Management Concepts
Case Study: Mergers and Acquisitions in the Automotive Industry
Different companies, similarly to people, have their own unique culture that is founded on ethnic, regional, temporal and industry-relevant factors. Therefore, when two or more businesses work together or decide to merge, these specific attributes may clash, leading to conflicts and worsened performance outcomes. The process of acquisition has to be planned in detail from the first contact between the companies to their full integration. In most successful cases, firms prepare thoroughly to enter the new relationship by mapping out the process of the merger and trying to predict the potential issues. However, the importance of the steps following the official merger may be overlooked by managers who fail to account for the fundamental cultural and structural differences between the businesses. In foreign mergers, this lack of attention to the whole strategy may be detrimental to the outcome of the project. This problem is especially evident for cultures that have Continue reading
Strategic Thinking Dichotomies: Logical Thinking vs. Creative Thinking
It is mutually agreed that the converses of intuition and analysis generate tension during the strategic thinking process. Researchers and contributors to strategic management making the case for logic argue that for strategy to be effective, the strategic thinking process must involve extensive formal analyses and objective collection and processing of data both from within and without the corporation. Rational reasoning enables managers gain an accurate perspective on the different options available before identifying the strategic option that best serves the organization’s cause: achieving its goals and objectives. Logical analysis encompasses assessing internal and external risks, strengths and weaknesses, market need and so on; so that strategy can be thought out to fit each of the above factors. In contrast to logical thinking, creative thinking involves taking a “leap of imagination” without any logically defined reason for taking such a leap. Creative thinking is a divergence from the rules governing Continue reading
What is First Mover Advantage? Definition & Examples
In the business world that is characterized by cutthroat competition, businesses do whatever is in their capacity to gain a competitive advantage. One of the common desires for any business is to dominate an industry or a region by being the first to enter into the specific business area. As a business concept, first mover advantage is a highly preferred concept where businesses seek to dominate given business areas by being the pioneers. Although many examples show first mover advantage is not always the best, there are equally many success stories of being the pioneers in a given business area. Firstly, from a management viewpoint, any business that acquires customers in an area where other companies have not been established ends up being the market leader as the pioneer in the given business area. Such an organization has the technological leadership of the products it creates. The process of developing Continue reading
Case Study of Dyson: Competitive Advantage through Innovation
Dyson, an electrical manufacturer, is solely owned by Sir James Dyson, and its headquarters are based in Malmsbury, Wiltshire. Dyson was the first company to introduce a bagless solution to conventional vacuum cleaners. After securing a significant market share in the vacuum cleaner industry, the company decided to diversify in to new products and countries. Dyson’s vision is to make products more environmentally friendly and easy to use; his ongoing mission is to promote design and innovation through the production of his products. Today Dyson has a presence in 45 countries and still maintain a 46 % and 32% share in the UK and US Vacuum cleaner market, respectively. Dyson has strong brand recognition, as the qualities projected by James Dyson become associated with the product itself. The product is instantly identifiable by the brand name, because of the innovative design portrayed. Even though Dyson is a leading vacuum cleaner Continue reading
Application of Complexity Theory in Organizational Change
The organizational change is an integral part of every company nowadays. All organizations should be able to adapt to the rapidly changing environment. Globalization, technologies, pluralism, and multiculturalism are factors that predetermine the need to adapt to alternations to remain competitive in the sphere constantly. Managers may utilize a complexity theory to implement organizational change. According to this theory, the organizations are characterized by non-linear relationships and lack of order. Managers should identify the connection between variables to conduct an efficient change. Still, many employees resist to changes. Scientists and researchers have made many attempts to comprehend the way organizations function and develop. Various approaches to their understanding have been used. For instance, the organization was often compared to the machine. However, this seeing of organization is no longer relevant due to the development of other theories. The complexity theory presupposes that organizations function based on instability, entropy, nonlinearity, and Continue reading