Advertisement

Gaining Continuous Competitive Advantage Over Your Competitors

استشاري وظيفة

If the search for a sustainable competitive advantage is the strategy of the keystone, the way to achieve this is debatable.  The objective of the study “BUILDING AND SUSTAINING COMPETITIVE ADVANTAGE” is to build a strong position to succeed and to protect, in particular by recourse to a number of barriers. More recently, the current resource reversed the reasoning of logic, stressing the need for the company to rely on its resources and expertise. The objective is to analyze the company's resources in order to make the most of investing in additional resources and seek to protect access. In one case as in the other, the task is made difficult by competitors. Since the company will be perceived to have success, competitors will seek to emulate. If they succeed, the company will lose its competitive edge. To avoid this risk, it can try to build his advantage on non imitable resources, or more surely on combinations of difficult to imitate resources.

Empirical studies on the subject exist, but it is difficult to have an overview of their results. The major problem is a lack of consensus on the definition of resources, skills and enterprise capabilities. Therefore, how to operationalize these concepts is questionable and the search results are not easily cumulative. To work around this problem, we propose in this article to use a different methodology: simulation. Indeed, in the absence of consensus on how to operationalize the resources and expertise within the company, the simulation is proving a powerful research tool due to its high level of abstraction. The tool allows us to study some characteristics of the resources and their impact on business performance regardless of operationalization. The approach certainly limits, but it allows a rigorous formalization of problems and opens interesting perspectives to explore later with empirical data observed in the course of trade.

This article begins by presenting some empirical findings from the literature on the preservation of competitive advantage. This work identifies some requirements that companies port may be working for a sustainable advantage. We then present a genetic algorithm simulation model to formally evaluate the impact of these requirements on long-term performance of companies. From a pedagogical perspective, this model is used in a simple way to stay easy to understand. Finally, we show how our model can be used in more sophisticated way to tackle the deeper problems.

The sources of sustainable competitive advantage

One of the most important contributions in the literature linking resources based approach to competitive advantage, which showed that resources able to provide a competitive advantage must have four characteristics: value, rarity, inimitability imperfect and non-substitutability. The study identified four conditions necessary to maintain competitive advantage. The first condition part of the heterogeneity of finding resources in a given industry. While companies who only have average resources can only hope to reach equilibrium, those who benefit from greater resources get a rent. The reference to Ricardo is based on the resumption of its argument that the observed heterogeneity in the industry is due to the fact that the higher production factors are in limited quantities were not sufficient to meet demand. As a result, companies can maintain their competitive edge if their resources are scarce and inimitable. The second condition is interested in ex post competition limits. Then there are forces that, once a company has obtained a competitive advantage, limit competition and thus preserve the diversity in the sector.

In the current resource, the jobs that have addressed these limitations focused on two of them: the non-substitutability and inimitability. Indeed, if the resources on which is built the annuity are substitutes, competitors will use substitutes and the company will lose its advantage. The inimitability result of a set of protections may take the form of patents, proprietary resources, images, historical conditions, knowledge, information asymmetries, etc. The study identified the causal ambiguity as a major protection of competitive advantage. Causal ambiguity indicates that competitors are unable to identify with certainty the causes of the efficiency of the industry leader. Not knowing what the drivers of competitive advantage are, they do not know what or how to imitate the same.

Furthermore, it is important to note, that this property is not so much a feature to look for in a given resource that a property of a set of resources and how whose company has accumulated. Moreover, such assets are related to the company and are therefore not salable. This leads to the third condition necessary for maintaining competitive advantage: the imperfection of mobility. Where a total immobility of resources characterizes useless outside of the company that owns them, imperfect mobility characterizes resources whose value decreases when used in another context. Because such resources lose some or all of their value if they leave the company, they are a solid foundation on which to base the competitive advantage. Note, however, they can also be the source of inertia that can be fatal in case of significant change in the environment. The fourth condition for maintaining competitive advantage is the existence of ex ante limits to competition. This means that the resources for competitive advantage should have been found by a lucky business or more visionary than others. If more companies were able to identify the interest he had to own these resources, they would have fought for until the cost reaches to get the expected gains from their possession.

Sustainable Competitive Advantage and imitation

There are extremely difficult problem for strategists: if a company manages to gain a competitive advantage, its success will attract the attention of competitors who seek to imitate, thereby eroding the competitive advantage in question. It is indeed fundamental to remember that the concept of competitive advantage is highly relative: it is, strictly speaking, an advantage over the competition. Thus, even if a company manages to constant improvement of its operational efficiency, this will not suffice him to achieve a sustainable competitive advantage, due to the rapid spread of best practices between undertakings. Imitation that is sure to indulge competitors invariably leads to competitive convergence.  Managers have gradually left the operational effectiveness supplant strategy. The result is a zero-sum competition, stable prices and declining, and pressure on costs that compromise companies' ability to invest for the long term. A strategy, he says, rests on unique activities and is not imitable.

This emphasis on imitation highlights an interesting problem for the business strategy. On the one hand, it is necessary to build on the resources and inimitable strategies to gain sustainable competitive advantage. On the other hand, competitors, alerted by the higher level of performance resulting from the sustainable competitive advantage, are sure to make every effort to mimic the familiar business success...

In the remainder of this article, we look at the difficulties that a business meeting when she seeks to emulate a rival seen as having more success.

Barriers to imitation

The first barriers to competition have been identified in economics, on the basis of arguments favoring the final product rather than how to make it. In this context, a significant barrier to market entry is legal. A company protected by a patent, for example, has a barrier to imitation to the extent that its competitors will be prevented from copying its product, or can only do that with extra costs due to the purchase of licenses. In one case as in the other, the company holds the patent will have a competitive advantage that will last as long as the patent will be able to protect it. As a result, works have studied the maneuvers undertaken by companies to make imitation an unattractive option. Among these maneuvers, of demonstrating a strong commitment competitors reduce the response probability. This applies even if the company poses a credible threat of retaliation.

Opening the black box of the company, management researchers have highlighted the existence of barriers of a different kind: imitate just is not easy. Very concretely, arrive at a product equivalent to that of competitor suppose to solve many problems. Some are of the offer and can be particularly elusive. Thus, the perception consumers have of a product based image, particularly difficult to imitate element. From the supply side, the most visible technical aspects (such as product attributes) will probably be imitated more easily by the use of reverse engineering techniques. But upstream of the points made in this too simplistic classification, it remains a major stumbling block: even the identification of the source of competitive advantage. Often it is impossible to imitate the leader simply because we do not know what issues to focus imitation.

Identified in the literature as causal ambiguity, this pitfall was the subject of several studies. The causal ambiguity, with property rights, one of the two brakes in imitation. Even if managers see well what successful companies, they are struggling to identify the causes of their success.  When there is causal ambiguity, "managers are unsure of what actions are best able to bring high performance, either in their business or home the competitors. In particular, the ability of a manager to identify and adjust the variables that affect the performance of its business is diminished. Without going that far, we can look at situations where managers have a reasonable understanding (albeit imperfect) links between causes and effects. They can try to emulate competitors perceived to have a good performance. Specifically, they seek to identify the resources and skills that enabled to achieve this performance.

Therefore, the company seeking sustainable competitive advantage will rely on skills that can provide both the advantage and the ambiguity that prevents imitation. Such skills have, according to the article given, three characteristics: they are tacit, complex and specific. They indicate that it is the interaction of these three characteristics which increases the ambiguity and barriers to imitation.

Thus, there is in the literature a set of features to look for a sustainable competitive advantage.  The latter is more likely to be achieved if resources and skills are tacit, complex and specific. If the identification of all these features is the result of work of the highest quality based on sound reasoning, the fact remains that the managerial implications are for less delicate. We believe that the difficulty in reaching concrete proposals immediately applicable business two reasons. The first is related to underlying concepts. These are indeed a high level of abstraction that makes them difficult to operationalize (hence the lack of empirical work). In addition, they show a changing terminology: the many terms used have unstable definitions, partly overlapping, and abound. The only example of terms of resources, skills, capabilities and routines will suffice to illustrate the magnitude of the problem. The second problem seems to hold the number of points to consider and refers us to the adage that "who grasp all." The review of the literature yet very partial we have proposed highlights a glaring lack of parsimony. Concretely, we cannot recommend to a manager to worry about without risking everything he could focus on nothing. Remain realistic: if the best minds in the field face these difficulties over the past twenty years, the solution is probably extremely difficult! We do not claim to have the miracle solution. We would rather, later in this article work in the direction of parsimony, which seems the most promising. If we end up with a very small number of important features to consider the problem of operationalization fact become simpler. We'll test in the suite if the mere fact of being imitable not sufficient to build and maintain a competitive advantage. 

CONCLUSION

Finally, this study is very limited. However, it is important to note that this is not due to the method. We thus desired educational purposes. The aim was to illustrate one of the highlights of the simulation: its ability to achieve formal studies when it is impossible to conduct experiments. The question behind the model addresses a sore point to deal with more than one. First, the empirical study of resources, skills, routines, remains extremely difficult. Their operationalization is subject to discussion and collection of large-scale data is extremely complicated. For these reasons, empirical studies on the subject are sorely lacking. The second reason is the complexity of interactions between variables and the difficulty to single out the causes of the observed effects. On the topic here, an empirical study would have resulted in no serious conclusion without a complex design takes into account a large number of control variables. Conversely, the simulation reproduces experimental design for deciding which control variables and which variables let fluctuate.

This point can be illustrated by taking the example of excellent existing research. Thus, in a search in every way remarkable, were able to conduct convincing test assertions of the resource theory by analyzing the Hollywood studios over thirty years. They were able to show that the owners were preferable resources in a stable environment while resources based on knowledge were preferable in unstable environment. It remains that the scale of the task empirically forced them to study only four resources and does not fully control the sources of differences between the two periods. Only the simulation can meet such constraints, the price, of course, other limits...

With some minor adjustments, the model presented here allow for example to measure the impact of different parameters, making them vary within a certain range. We could then easily compare the results depending on the complexity of the sector (by increasing the number of routines), intensity of learning (by allowing a higher success rate), etc. Again we want to stress the many opportunities offered by the method. These limits are the result of deliberate choice of simplicity, which Assembly us important for the sake of clarity.