Showing papers on "Competitive advantage published in 1986"

Strategic Factor Markets: Expectations, Luck, and Business Strategy

Abstract: Much of the current thinking about competitive strategy focuses on ways that firms can create imperfectly competitive product markets in order to obtain greater than normal economic performance. However, the economic performance of firms does not depend simply on whether or not its strategies create such markets, but also on the cost of implementing those strategies. Clearly, if the cost of strategy implementation is greater than returns obtained from creating an imperfectly competitive product market, then firms will not obtain above normal economic performance from their strategizing efforts. To help analyze the cost of implementing strategies, we introduce the concept of a strategic factor market, i.e., a market where the resources necessary to implement a strategy are acquired. If strategic factor markets are perfect, then the cost of acquiring strategic resources will approximately equal the economic value of those resources once they are used to implement product market strategies. Even if such strategies create imperfectly competitive product markets, they will not generate above normal economic performance for a firm, for their full value would have been anticipated when the resources necessary for implementation were acquired. However, strategic factor markets will be imperfectly competitive when different firms have different expectations about the future value of a strategic resource. In these settings, firms may obtain above normal economic performance from acquiring strategic resources and implementing strategies. We show that other apparent strategic factor market imperfections, including when a firm already controls all the resources needed to implement a strategy, when a firm controls unique resources, when only a small number of firms attempt to implement a strategy, and when some firms have access to lower cost capital than others, and so on, are all special cases of differences in expectations held by firms about the future value of a strategic resource. Firms can attempt to develop better expectations about the future value of strategic resources by analyzing their competitive environments or by analyzing skills and capabilities they already control. Environmental analysis cannot be expected to improve the expectations of some firms better than others, and thus cannot be a source of more accurate expectations about the future value of a strategic resource. However, analyzing a firm's skills and capabilities can be a source of more accurate expectations. Thus, from the point of view of firms seeking greater than normal economic performance, our analysis suggests that strategic choices should flow mainly from the analysis of its unique skills and capabilities, rather than from the analysis of its competitive environment.

Organizational Culture: Can It Be a Source of Sustained Competitive Advantage?

Abstract: Three attributes that a firm's culture must have to generate sustained competitive advantages are isolated. Previous findings suggest that the cultures of some firms have these attributes; thus, these cultures are a source of such advantages. The normative implications of the analysis are discussed. Firms that do not have the required cultures cannot engage in activities that will modify their cultures and generate sustained superior financial performance because their modified cultures typically will be neither rare nor imperfectly imitable. Firms that have cultures with the required attributes can obtain sustained superior financial performance from their cultures.

Entry strategies for international markets

Abstract: The New Global Economy: Challenges and Opportunities. Designing Entry Strategies for International Markets. Deciding on the International Product Candidate and Target Market. Entering International Markets Through Exports. Entering International Markets Through Licensing and Other Contractual Arrangements. Entering International Markets Through Investment. Deciding on the Right Entry Mode. Designing the International Marketing Plan. Designing and Managing Entry Strategies Across Cultural Differences. Designing Entry Strategies for Global Competetive Advantage in Multinational Enterprise Systems.

Changing Patterns of International Competition

Abstract: What does international competition mean for competitive strategy? While there is an ample literature on the problems of becoming a multinational, the specific strategic needs of established multinationals requires closer examination in light of the increasingly competitive international environment. We need to distinguish between multidomestic industries and global industries. If American firms are to catch up with the Japanese, they must strive to achieve global platforms rather than engage in competition on a country-by-country basis. A global strategy requires that a firm rebalance the configuration and coordination of its activities so that comparative as well as competitive advantage is achieved. The increasing globalization of international competition requires strategic responses that overcome country parochialism.

Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy

Abstract: Establishes a framework within which to analyze the profit distribution of innovations and determines the reasons why imitators may outperform innovators. First, the three fundamental building blocks necessary to explain the distribution of innovations are discussed: the appropriability regime, complementary assets, and the dominant design paradigm. Next, the imitation process and the distribution of profits between innovator and follower are examined by relating these three concepts. Then, an appropriate control structure is proposed which the innovator ought to establish over critical, complementary assets. Finally, implications for R&D strategy, industry structure and trade policies are discussed. Analysis suggests that firm boundaries are an important strategic variable for firms that innovate. Also, innovator ownership of complementary assets can be the deciding factor in whether innovators or imitators outperform one another in garnering the most economic return from innovation. (SFL)

The manager as negotiator : bargaining for cooperation and competitive gain

Abstract: Describes the principles of effective negotiation and shows how managers can use these techniques to sustain agreements, and obtain authority or resources.

Strategic Management of the Socially Responsible Firm: Integrating Management and Marketing Theory

Abstract: Corporate social responsibility is conceptualized as a “product” offered to key publics of the firm. A model is proposed that integrates the content and process considerations of social responsibility using a “marketing” orientation. This approach is designed to increase the firm's relative competitive advantage and enhance the benefits of socially responsive behaviors.

Information systems, telecommunications, and their effects on industrial organization

Abstract: There is general agreement among academic researchers that information systems can prove strategic if they are well crafted. However, the field currently lacks frameworks that predict which applications might provide lasting benefit and sustainable competitive advantage. Moreover, little has been attempted in analyzing effects on the organization of industry. These effects may, in the long term, prove at least as interesting as effects on individual firms. We present here an initial examination of the effects of information systems and telecommunications on the competitive position of firms. Our intention is to provide guidelines for choosing opportunities that convey sustainable competitive advantage. We present also an initial analysis of predicted changes in the organization of industry. This work draws on field research and on recent work in market economics. INTRODUCTION assessing options and choosing preferred strategies, seem yet more distant. A growing literature attests to the fact that information systems can be used as competitive There are firms that, through well-timed and weapons within the context of a market well-crafted applications, have achieved reduced economy (Clemons, et al., 1984; Clemons and costs or enhanced service for their customers, McFarlan, 1986; Harris, 1985; Ives and Learleading to improved margins or increased month, 1984; Jonscher, 1983; McFarlan, 1984; market share; perhaps they have also gained Petre, 1984; Porter, 1985; Rackoff, 1985; sustainable competitive advantage. Merrill Wiseman, 1985). This literature largely relies Lynch Cash Management Accounts, American on a common and perhaps overworked collecHospital Supply and McKesson Drug Company tion of examples that plausibly demonstrate use distribution systems, and American Airlines and of information systems to gain competitive adUnited Airlines reservation systems are among vantage. Since the authors' tone is generally the most widely-cited examples of such applicaevangelical, the examples selected are those that tions. Many others are known. There have also can be described as major successes. Unhappily, been mistakes, of which very little is written. neither the literature not the oral tradition goes into much depth; both are largely anecdotal. For examples of the benefits of successful straLittle is understood by way of general principles tegic choices and of the costs of mistakes, we or theory about why certain moves work or are look initially to financial services and banking. likely to work, or why others fail. Still less is Cash Management Accounts (CMAs), introknown about the longer-term organizational efduced by Merrill Lynch in the late '70's during a fects on industry of existing or anticipated inforperiod of high inflation and high interest rates, mation systems technologies. Normative and successfully drew billions of dollars out of banks predictive models, which would be valuable for and out of savings and loan institutions. Now,

The growing risks of information systems success

Abstract: This article describes the risks of information systems success achieved in the absence of appropriate regard for the potential impacts. A framework, developed from some general considerations of using technological change for competitive advantage, is proposed as a way of assessing the risks. Finally, some suggestions are made for management policies and procedures to insure that potentially high-risk projects receive the appropriate degree of attention before they are implemented.

Linking information technology and corporate strategy: an organizational view

Abstract: Considerable attention is currently focused on using information technology to obtain and maintain competitive advantage. Numerous mini-cases have been used to illustrate the use of information systems for competitive advantage, and various conceptual frameworks have been proposed to aid in the identification of such applications. Much of this work is grounded in a single concept of strategy formulation, an approach that we refer to as "top-down." A survey of senior information system executives demonstrates the potential problems of relying on a top-down approach. A second, "adaptive" approach, appears to offer potential value for the identification of competitive applications in organizations facing considerable environmental turbulence or in which senior strategists are relatively uninformed about information system resources. Five organizational roles are defined that can help support this adaptive approach. cover of widely read business magazines INTRODUCTION (Fortune. 1985; Business Week, 1985). Continued decline in the unit cost of computer Such attention is welcome legitimization for inhardware and steady improvement in the flexiformation systems managers who have worked bility and power of computer software have led for years to communicate the exciting potential to dramatic growth in the use of information of information technology. But management's technology in American business. Applications new interest in competitive information systems have proliferated rapidly beyond corporate walls presents a difficult challenge for information to encompass suppliers, distributors and consystems managers, who frequently find themsumers, and consequently, some applications of selves charged with responsibility for identifying information technology have acquired the uland implementing strategic applications. Altimate label of respectability: they are called though management attention has been focused "strategic" in business journals (McFarlan, on the potential of competitive information sys1985), and featured within, and even on the tems, there is a dearth of practical, and even

Competing in Time: Using Telecommunications for Competitive Advantage

Abstract: quences of the introduction of personal computers in the market is addressed weakly. Creating the Computer would be a good starting point for economists who are interested in doing research in several areas. It provides relevant information suitable for studying topics in economics, information technology or science, technology, and public policy. (Reviewed by Manual Frau-Ramos, University of Massachusetts at Amherst)

Cost leadership strategy and experience curves

Abstract: Investing in cost leadership by rapidly riding down the experience curve is a common way to establish a firm's competitive advantage. Its success depends, in part, on the factors that underlie the experience curve. In this paper we make the distinction between cost declines that occur at any point in time and cost declines that may occur over time. This leads us to consider a revised experience concept in which the dynamic interrelationship between a firm's production rate, cumulative production and unit cost is explicitly considered. We provide a detailed analysis of various scale-learning relationships and their strategic implications for establishing competitive advantage through an investment in cost leadership. We also prove analytically that such investment should take place only in the presence of learning.

The Hard Problems of Management: Gaining the Ethics Edge

Abstract: Offers managers new tools to deal with the tough problems businesses face today. Reveals how analyzing the ethical dimensions of problems actually offers competitive advantages. Offers illustrative case examples from internally recognized companies showing that high ethics and high profits go hand in hand--and identifies the factors responsible for these companies' success.

Competitive information systems in support of pricing

Abstract: Recent highly publicized success stories have focused general managers' attention on so called "competitive information systems." But organizations attempting to identify systems that provide competitive advantage are finding the search to be frustrating and often unrewarding. This article combines two familiar information systems concepts, the Anthony framework and information attributes, to produce a methodology for identifying one class of competitive information systems, systems in support of product pricing. A number of examples demonstrate the descriptive utility of the classification scheme, and provide a synergistic vehicle for the discovery of new applications.

Infotrends: Profiting From Your Information Resources

Abstract: The Information Economy The Information- Processing Industry Rethinking Your Business in the Information Economy New Strategies for Gaining Competitive Advantage Strategic Information Management New Structures and Functions for Corporate Information Management Managing and Planning for Information Productivity The Knowledge Worker: Working Smarter Not Just Harder The Changing Role of Business in the Information Society Index.

Joint supply and the finance of charitable activity

Abstract: This article puts forth a joint-supply model of charity, in which the purchase of a private good yields excess revenues used to finance a public charitable output. Joint supply is an especially effective fund-raising technique when the private and public goods are Hicksian complements. Competitive advantages, gained through tax-exempt status, also allow charities to outcompete for-profit competitors. Evidence drawn from U. K. charities demonstrates that large successful charities generate a sizable portion of revenues from direct-trading activities.

An Industrial Competitiveness Model

Abstract: The essence of strategic management is to generate within the firm the capability and the potentiality and then fully utilize them to better cope with competition. For this, however, the “competitiveness” level of a firm needs to be defined and measured. The present paper proposes a model for (i) measuring the competitiveness level of a given industrial firm, (ii) identifying the strengths and weaknesses of the firm, and (iii) formulating strategies to improve the competitive position of the firm. Field experience with this model is encouraging enough to discuss its usefulness as a tool for competitive strategy formulation.

Competition, Competitive Strategy, and Industrial Change: The Case of Electronic Components

Abstract: This paper considers the changing foundations of competition in the electronic components industry and their implications for production and location at the international level. Pressures in favor of the adoption of competitive strategies based on product destandardization are described. As a consequence, it is argued, the industry's traditional spatial division of labor stands to be recomposed along different lines.

Competitive strategy analysis on the personal computer

Abstract: It is impractical to expect busy senior managers to devote much time to learning intricacies of modern strategic analysis. But much analytic expertise can be built into a computer program. This article describes a program that can integrate the analytic expertise of a computer with experience and wisdom of executives.

Competitive strategy in the hospital industry

Abstract: Porter recently developed a framework for applying effective strategies in an increasingly competitive business environment. His framework can be adapted to the health care industry and can serve as a tool for success.

Business implications of knowledge-based systems. part II

Abstract: The first section of this article showed how expert systems (ESs) evolved from a branch of the artificial intelligence (AI) field which focused on solving difficult, real world problems. A number of frameworks were put forth to show how ESs compare to other information systems (IS), and to help the practitioner identify valuable and feasible ES applications. Further, it was argued that a well-targeted ES may provide the user with a defensible competitive advantage, and because ESs are currently moving from universities into commerce it is now time to investigate their potential.This section moves on from the discussion of identification of ES opportunity into the issues of development and implementation. In comparison to other IS projects, ESs should prove more demanding. And even though the opportunity for strategic advantage may be available, the execution of a successful ES presents many managerial challenges. The discussion draws on previous literature to help identify issues which are likely to be encountered in practical application of ESs in business. Throughout the discussion, research opportunities are raised and the summary presents a research agenda.

Decision support systems: advantages in consumer marketing settings

Abstract: Information technology has made possible the recognition, acquisition, organization, and controlled retention of data from sources virtually unavailable in the past. Terms such as “the information society” and “information glut” have become commonplace. High‐level corporate positions with titles such as Chief Information Officer are being created in an attempt to efficiently and effectively use information for the benefit of the organization and the society it serves. A major challenge in the 1980s is to gain and maintain the ability to use this information for competitive advantage. Decision Support Systems (DSS) enable marketing managers to integrate internal and external information environments within a decision‐making context. Useful features available within Marketing Information Systems can be incorporated with the potentials of DSS. Together the two systems can provide marketing managers with opportunities to anticipate, identify, and creatively respond to changing consumer demand.