Report on Management Strategy: Competitive Advantage and Innovation

This report delves into the critical concepts of competitive advantage and innovation within a management context. It emphasizes that sustainable competitive advantage is difficult to achieve in dynamic markets and highlights the significance of continuous innovation to meet evolving customer needs. The report examines product and process innovation through examples like Intel and Nike. It then applies Porter's Five Forces model to the food industry, assessing the bargaining power of buyers and suppliers, competitive rivalry, the threat of substitutes, and the threat of new entrants. The report concludes by discussing strategies for building and sustaining competitive advantage through superior efficiency, quality services, customer responsiveness, and innovation in business processes. References are provided.

Running head: MANAGEMENT STRATEGY 1
Management Strategy
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Innovation and competitive Advantage
Competitive advantage has been one of the primary strategies that businesses have
held so high. Having a competitive advantage in the market always last for a short duration
due to the dynamics that occur from time to time in the market. Competitive advantage is
characterized by the ability of the business to cater for the needs and values of the customer
(Johnston & Bate, 2013). Customers have changing needs and thus they are moved by
organizations that provide for their emerging needs through continuous innovation. The
effectiveness of the premium prices is supported by an organization that is concerned about
cost efficiency, customer responsiveness, and rendering of quality goods and services.
Innovation can take various forms that are not limited to product innovation and
process innovation. Product innovation can take the form of adding new features to the
product so that it can sufficiently meet the values and the requirements of the customers.
Product innovation can lead to an extremely new product or changes to the existing product
(Boons & Lüdeke-Freund, 2013). A good example for a product innovation is the case of
the invention of a microprocessor by Intel in the 1970s. The product innovation made the
company more competitive in the market. It is relevant to note that this change guaranteed
faster, powerful and more secure operations that created sustainability in the market. Process
innovation can best be explained by the initiatives that companies engage in so as to make
their operations more cost effective and interactive(Smith,2013). Process innovation creates
an avenue where customers can be involved in the production of the goods through availing
of processes that entertain this. A great example would the case of Nike Company. The
company was aware of the impact that customer involvement had on building its competitive
advantage. With this in mind, it came up with a portal where its potential customers could
upload the designs that they want for their shoes, and they could customize the shoes for
them. The inclusion of the customers boosted the competitive edge of the company. The

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company was able to serve a larger market because it could customize its goods to its clients.
Process innovation can be in the case of a new business model for a company. Air Asia is an
example of an organization that gained a competitive edge in the Air line business by
incorporating of e-commerce into its operations. The encompassing of e-commerce into its
operations has seen the company save a lot of its resources than any other company in the
market. Nonetheless, companies such as NOKIA, MOTOROLA and Block Busters have
failed in upholding continuous innovation.
Porter's five forces in a food Industry
The Porter’s five forces model appertain to five factors that verify the competitiveness
of the company. To begin with, the bargaining power of the buyers is a factor that is a threat
to organizations. The buyers have the disposition of purchasing the products that they require
from any seller (MBA Crystal Ball, 2017) the threat lies in the ability of the buyers to access
adequate information regarding the products that are in the market. The opportunity that is
available for the industry is the capacity to utilize technology that will ensure that the
customers are served with quality services. With the quality services, the customers will find
a reason to purchase their products as compared to those of their competitors.
To add on, the bargaining power of suppliers is imperative in the food industry. The
potential suppliers, in this case, are the dairy suppliers, bakery suppliers, and meat vendors.
To explain their bargaining power, it can be termed as low given that there are numerous
providers of the fast foods. The opportunities that lie in the case of the fast food industry are
the ability to get supplies for their outlets due to the limited differentiation that is in the
market. Reliability of the suppliers is thus assured to the owners of the fast food industries.
To add on, competitive rivalry among the competitors is a significant threat in the
market. Competitors hinder a company from attaining high-profit margins in the market. The
increased number of outlets is a major threat to the fast food eatery (E. Dobbs, 2014). The

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opportunity that is available is that a fast food eatery is supposed to provide quality services
that surpass those of its competitors so that it can earn a competitive edge in the market.
The threat of substitute’s products is another force. In a fast food joint, there is the
likelihood that one product may be substituted by another. For instance, a sandwich and a
pizza, the threat of substitutes are accelerated by the limited differentiation in the market.
The threat exists where one product can be preferred to another. The opportunity that exists is
the ability of a fast food joint to come up with unique products.
Lastly, the threat of new entrants is also a force that is applicable in the fast food
industry. The barriers to entry dictate the inability of a new food outlet to enter the market
due to market restriction (Rothaermel, 2015). The restrictions give a competitive edge to the
food outlets that are already in the market which is a threat. The opportunities lie in the
ability to come up with unique products that will lock out the rivals in the market. It is
significant for the fast foods to take note of the impact that the five forces have on acquiring
of a competitive edge in the market. The food outlets need to take advantage of the available
opportunities to be competitive in the market.
Building and sustaining competitive advantage
Superior efficiency
Sustaining a competitive advantage can be arrived at through the efficient use of
resources. Sustainability can be reached through the utilization of a limited number of inputs
and still realizing of high outputs (Peppard & Ward, 2016). A company that can gain a
competitive edge in its production process gains the superior efficiency as compared to those
that use excessive resources in the production of the same products. Superior efficiency can
also be regarding the hours used and the labor costs that are incurred.
The other factor relates to the quality of services that are rendered. Customers are
moved by the availability of quality services. Customers always want to get the value of their

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money. In the case that a company produces quality services, then it is in a position to gain a
positive corporate image from its customers (McGrath, 2013).The competitive edge is
necessitated by quality services that are well priced. Excellent quality can act as a market
barrier to the new entrants that reduce the competitiveness of the market, and thus a company
can easily dominate its market.
Innovation is imperative in the running of a successful business. Innovation can be
regarding product advancement or changes in the processes that are involved in the business.
Innovation is all about coming up with strategies that will make the customer more
comfortable through the provision of services that better match their changing needs. Product
innovation will ensure that a company always produces products that are feasible in the
market (Saeidi et al.2015). Or products that better fit the dynamics that occur in the market.
The processes that are involved should be those that are cost effective. That is the company
should be able to be resource effective in the production of goods and services. A good
example of implementing of innovation will be the Toyota Company, a company that has
instigated a lean production system that has improved the productivity of the employees and
at the same time creating a competitive advantage for itself through cost effectiveness.
Customer responsiveness is the last factor that addresses the issue of competitiveness
in the market. The customer should always be at the center of the company (Brocken et
al.2014). Are the needs, values, requirements and the expectations of the customers should
always be the driving force in the formulation and implementation of the strategies of the
company. The goods and services that are produced should fully comply with what the
customer wants or is looking for. It can be informed of prices, quality or convenience.

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References
Ball, M. C. (2017). Porter's Five Forces. Retrieved August 11, 2017, from MBA Crystal
Ball: http://www.mbacrystalball.com/blog/strategy/porters-five-forces/
Bocken, N. M. P., Short, S. W., Rana, P., & Evans, S. (2014). Literature and practice review
to develop sustainable business model archetypes. Journal of cleaner production, 65,
42-56.
Boons, F., & Lüdeke-Freund, F. (2013). Business models for sustainable innovation: state-of-
The-Art and steps towards a research agenda. Journal of Cleaner Production, 45, 9-
19.
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of
industry analysis templates. Competitiveness Review, 24(1), 32-45.
Johnston, R. E., & Bate, J. D. (2013). The power of strategy innovation: a new way of linking
creativity and strategic planning to discover great business opportunities. AMACOM
Div American Mgmt Assn.
McGrath, R. G. (2013). Transient advantage. Harvard Business Review, 91(6), 62-70.
Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a
digital strategy. John Wiley & Sons.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate
social responsibility contribute to firm financial performance? The mediating role of
competitive advantage, reputation, and customer satisfaction. Journal of Business
Research, 68(2), 341-350
Smith, M. H. (2013). The natural advantage of nations: business opportunities, innovation
and governance in the 21st century. Earthscan.