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Organizational resources and establishing competitive advantage - Essay Example

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Organizational resources and establishing competitive advantage 1. Introduction The potential of organizations to develop a competitive advantage is depending on a series of factors. Most commonly, the level of achievement of the organizational goals and the profitability of a firm are regarded as key criteria in order to evaluate whether a company is successful or not…
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Organizational resources and establishing competitive advantage
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Organizational resources and establishing competitive advantage

Download file to see previous pages... On the other hand, it has been made clear that not all organizations are able to effectively develop their resources. Also, the continuous increase of competition in the global market is a factor that can negatively influence the efforts of organizations to improve their position in the market using their resources and capabilities. It seems that in the long term, the transformation of organizational resources into a competitive advantage has to be carefully managed since the challenges in the internal and the external organizational environment are likely to be many; as the conditions in the organizational environment become more hostile, under the influence of the global market pressures, the support that an organization has to provide to its resources has to be increased, otherwise their chances to become a competitive advantage are significantly reduced. At this point, the following issue appears: how an organization can secure that its resources will become, even in the long term, competitive advantage? It seems that such prospect cannot be considered as guaranteed, especially in industries where competition is high. This issue is further analyzed in the sections that follow using the literature published in this field. 2. Organizational resources and their use for the establishment of competitive advantage 2.1 How an organization can establish competitive advantage from its resources The identification of the exact characteristics of competitive advantage in modern organizations is a challenging task. Researchers and theorists have tried to identify the criteria under which organizational resources can become competitive advantage, but the results of their studies seem to be contradictory. Most commonly, emphasis is given on the balance between the firm’s strengths and weaknesses, as the specific relationship can also affect the firm’s opportunities and threats. The interaction of the above sectors in the context of organizational growth is reflected in the SWOT analysis framework. The above framework is based on the view that firms that are likely to emphasize on their internal strengths and control their weaknesses are more able to face environmental threats, a fact that can help them to develop competitive advantage towards their rivals (Barney 1995). However, the terms under which the specific effort would be successful should be further explored. Indeed, even if effectively organizing its internal environment and if it tries to avoid major market risks, a firm has still to face the threat of an unexpected downturn if there are no other strategic alternatives in place, as for example strategic alliances with other firms that control an important share of the relevant industry. On the other hand, Peteraf (2006) noted that there are certain conditions that can increase the potentials of an organization to develop a competitive advantage. These conditions could be described as follows: ‘superior resources (heterogeneity within an industry), ex post limits to competition, imperfect resource mobility, and ex ante limits to competition’ (Peteraf 2006, p.179). It is assumed that organizations that seek to develop a competitive advantage should focus on the particular conditions. This view can be criticized as of the lack of explanations regarding the potentials of these conditions to exist in all ...Download file to see next pagesRead More
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