Competitive Strategy and role of Organization Structure

What is Competitive Advantage: In simple words, it’s the “edge” a particular firm/company is having over it’s rivals and is able to generate more value for it’s stakeholders (customers, employees, suppliers,shareholders, etc)

Competitive Strategy is a strategy to maintain this advantage over rivals. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.

There are two ways to sustain competitive advantage:

  1. Privileged Position: This is just by virtue of you position, and is not sustainable. For example, India is an IT Hub, because of privileged position(low cost, English speaking, good IQ and skilled workforce). Can India or Indian IT companies depend on this position based advantage forever. Time to “think”.
  2. Superior skills and competencies : This is a great way to keep you advantage intact by building on rare and non fungible skills required for a leader. Some examples are quality, brand loyalty, innovation, etc.

Important questions:

  • What is your source of competitive advantage ?
  • Are these based on privileged position or are these based on competencies ?
  • Is your competitive advantage sustainable ?
  • What must we do in the short run and in the long run to maintain / develop sustainable competitive advantage ?

(Refer Robin hood’s case)

Process model of strategy formulation:

  • 3 layered process
  • Step 1: What is the organization goal/purpose? What assumptions are we backing up? What does the analysis of the data available tell us? Do I have a competitive advantage, if yes, is that based on my privileged position or competencies.
  • Step 2:  Design competitive strategy based on your org goal, assumptions and analysis.What should be done to maintain my advantage, or get to my advantage over others.
  • Step 3: Form your organization design to achieve that strategy. Pls note that Org Design should follow Strategy and not other way around.
  • Step 4: Keep on innovating on the skills and processes, measure organization performance and build competencies.

This is an ongoing process, and companies keep on working on this aggresively to maintain supremacy.

[This blog is captured from “Organization Structure and Design” class notes (by Prof Sourav Mukherji  Some information referred from Wikipedia/other listed sites.]

 

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