The Past and Future of Competitive Advantage
The Past and Future of Competitive Advantage
By Clayton Christensen
The author introduces to us that the concept of competitive advantage has inspired strategists in imitating the strategies of successful companies. However, the success of strategies is relative to the conditions of a particular place at a particular time— that not all strategies used by successful companies will work for others. Some companies that have economies of scale, integration and nonintegration, and process-based core competencies gain competitive advantage over others. For companies to gain competitive advantage, their strategies must not be modeled after those that have worked for others, rather, they must know the determinants as to which conditions those strategies would be able to give them competitive advantage. The concept of economies of scale is one wherein companies are able to cover fixed costs through broader scale of production. However, the problem of fixed costs are solved by managerial and technological progress. This leads to the dissolution of one’s competitive advantage through economies of scale. The concept of economies of scope is one in which firms are able to gain competitive advantage through diversification of product offerings. However, the author presents that focus strategies have become more efficient than diversification strategies. For a company to outsource a value-added activity, it must meet three conditions: (1) specify the needed attributes; (2) access to reliable technology that measure those attributes; (3) the company must determine which to adjust in their system during variations in delivery by supplier. Vertical integration is an advantage when a company is competing for the needs of the customers that have not been satisfied by the functionality of available products. When functionality has been met, companies can gain an advantage by delivering products to the market rapidly. Due to the adaptation of technological and scientific progress,
By Clayton Christensen
The author introduces to us that the concept of competitive advantage has inspired strategists in imitating the strategies of successful companies. However, the success of strategies is relative to the conditions of a particular place at a particular time— that not all strategies used by successful companies will work for others. Some companies that have economies of scale, integration and nonintegration, and process-based core competencies gain competitive advantage over others. For companies to gain competitive advantage, their strategies must not be modeled after those that have worked for others, rather, they must know the determinants as to which conditions those strategies would be able to give them competitive advantage. The concept of economies of scale is one wherein companies are able to cover fixed costs through broader scale of production. However, the problem of fixed costs are solved by managerial and technological progress. This leads to the dissolution of one’s competitive advantage through economies of scale. The concept of economies of scope is one in which firms are able to gain competitive advantage through diversification of product offerings. However, the author presents that focus strategies have become more efficient than diversification strategies. For a company to outsource a value-added activity, it must meet three conditions: (1) specify the needed attributes; (2) access to reliable technology that measure those attributes; (3) the company must determine which to adjust in their system during variations in delivery by supplier. Vertical integration is an advantage when a company is competing for the needs of the customers that have not been satisfied by the functionality of available products. When functionality has been met, companies can gain an advantage by delivering products to the market rapidly. Due to the adaptation of technological and scientific progress,