The Quest for Competitive Advantage
Can increase productivity through employee & environmental development provide a sustainable competitive advantage for western Multi-National Companies? The ultimate task of the Multi-National executive is to maximize shareholder wealth. Securing a viable working competitive advantage in which to lead the marketplace provides a low-risk method of supporting this mandate. Over the last decades, companies have searched for ways to define themselves, and as such the markets have been shaped into the trend of the day. In the ’60s the strategy emphasized Scale, where the post-war, large production drive combined with consumerism to fuel western growth, largely driven by America.
Economies of scale and the use of advanced logistical infrastructure provided a key advantage that was difficult to immediately imitate. As the ’70s progressed, major economies such as Japan were able to match and improve this large-scale strategy, putting pressure on Costs, which was to prove the major element of advantage. This is most noticeable when considering the entry of Japanese vehicles into the western market where a low pricing strategy provided significant rapid capture of market share.
A natural focus on Quality was to follow and through the 80’s the battle between cost and quality raged until this advantage became standard. The global leadership dynamic however experienced a transition as America lost its lead to Japan in many consumer products from vehicles to electrical items, where quality and cost gave consumers a better deal. In these mainstream product segments, the US has never recovered its prior dominance.
The late ’80s and ’90s saw the focus moved toward efficiency and speed as these elements were recognized as offering key competitive advantage factors in a world that was growing more connected and open. Time-saving technology such as the facsimile machine and modem-linked office computers were introduced as cost-efficient solutions, although still offering rather limited options. This period is also notable for the beginning transfer of power from manufacturer to consumers due to a large choice of suppliers, faster product cycles, and quality. Manufacturers needed to find new methods to attract and keep the client whilst protecting margins.
Over the last 10 years, the birth of customization and specialization has largely spread into the mainstream market which has moved from a manufacturer-driven approach (product driven) to one which is much more customer-centric (market driven). Proactive companies were early to embrace this concept as a method to tie in customers by a strategy of direct communication and customization with their audience to understand which products the market desires. A perfect example is represented by the personal computers market which launched initially as little more than a word processor and simple games machine.
Hardware was more advanced than software and few local area networks or opportunities to communicate externally existed. Just a few years on and the customer demands interesting, labor saving and entertainment software has radically reformatted leisure and work habits throughout the western world. The rise of technology-aided communication and efficiency tools has led the industry through many apparent golden but rather short-lived opportunities to gain a competitive advantage. Projects entitled CRM9, ERP10, SCM11, Business process reengineering12, eCommerce13, JIT14, and a host of others have all come and gone, rarely producing the benefits expected.
Many articles intimate that technology may be hindering competitive ability. “Instead of inspiring employee motivation, technological progress can sabotage it for many whose livelihood does not depend on introducing change. Gaining an advantage from technology is likely to be found in the agility and flexibility that it can provide to the organization.
The Quest for Competitive Advantage