Competitive advantage is the ability of a company to outperform its competitors by offering better products or services, lower prices, or more value to its customers. Competitive advantage can be achieved through different strategies, such as cost leadership, differentiation, or focus. However, these strategies are not mutually exclusive, and a company can use more than one of them to gain an edge over its rivals.
One of the ways that a company can achieve competitive advantage is through process implementations, which are the methods and techniques that a company uses to create and deliver its products or services. Process implementations can affect the efficiency, quality, innovation, and customer satisfaction of a company’s offerings. By improving its processes, a company can reduce its costs, enhance its quality, increase its innovation, and satisfy its customers better than its competitors.
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What are the Principles of Competitive Advantage Related to Process Implementations?
According to Principles of Management, there are eight principles of competitive advantage that have been categorized into product implementations and process implementations. Product implementations are related to creating new products or services, enhancing existing products or services, or branding products or services. Process implementations are related to reducing costs, enhancing quality, increasing innovation, or improving customer service.
The following are the four principles of competitive advantage related to process implementations:
Reduce Costs
A company can achieve competitive advantage by reducing its costs throughout its value chain activities, such as procurement, production, distribution, marketing, and after-sales service. By lowering its costs, a company can offer its products or services at a lower price than its competitors, or maintain the same price but increase its profit margin. A company can reduce its costs by using economies of scale, learning effects, outsourcing, automation, standardization, or lean production.
For example, Walmart is known for its cost leadership strategy, which relies on its efficient supply chain management, large-scale purchasing power, low-cost distribution network, and everyday low prices.
Enhance Quality
A company can achieve competitive advantage by enhancing the quality of its products or services, which can be measured by their performance, features, reliability, durability, aesthetics, or serviceability. By improving its quality, a company can increase its customer satisfaction and loyalty, reduce its customer complaints and returns, and differentiate itself from its competitors. A company can enhance its quality by using total quality management (TQM), six sigma, continuous improvement (CI), or quality certifications.
For example, Toyota is known for its high-quality products and processes, which are based on its TQM philosophy of kaizen (continuous improvement), jidoka (automation with human touch), andon (visual control), and kanban (pull system).
Increase Innovation
A company can achieve competitive advantage by increasing its innovation in terms of developing new products or services, improving existing products or services, creating new processes or methods, or finding new markets or segments. By increasing its innovation, a company can meet the changing needs and preferences of its customers, create value for its customers, and gain a first-mover advantage over its competitors. A company can increase its innovation by using research and development (R&D), open innovation, crowdsourcing, or design thinking.
For example, Apple is known for its innovation in creating products such as the iPod, iPhone, iPad, and Apple Watch, which have revolutionized the music, telecommunication, computing, and wearable industries.
Improve Customer Service
A company can achieve competitive advantage by improving its customer service in terms of providing timely, accurate, courteous, and personalized assistance to its customers before, during, and after the purchase. By improving its customer service, a company can enhance its customer satisfaction and loyalty, increase its customer retention and referrals, and differentiate itself from its competitors. A company can improve its customer service by using customer relationship management (CRM), social media, chatbots, or artificial intelligence (AI).
For example, Amazon is known for its customer-centric culture and service, which include features such as free shipping, one-click ordering, prime membership, customer reviews, and Alexa voice assistant.
Conclusion
Competitive advantage is the ability of a company to outperform its competitors by offering better products or services, lower prices, or more value to its customers. Competitive advantage can be achieved through different strategies, such as cost leadership, differentiation, or focus. However, these strategies are not mutually exclusive, and a company can use more than one of them to gain an edge over its rivals.
One of the ways that a company can achieve competitive advantage is through process implementations, which are the methods and techniques that a company uses to create and deliver its products or services. Process implementations can affect the efficiency, quality, innovation, and customer satisfaction of a company’s offerings. By improving its processes, a company can reduce its costs, enhance its quality, increase its innovation, and satisfy its customers better than its competitors.
The four principles of competitive advantage related to process implementations are reducing costs, enhancing quality, increasing innovation, and improving customer service. By applying these principles, a company can gain a competitive advantage over its rivals in its industry.