Knowledge Management and the Competitive Strategy of the Firm - Article Example

Summary of Knowledge Management and the Competitive Strategy of the Firm Introduction Knowledge management also abbreviated as KM proves to be a strategy that can assist in enhancing organizational competitiveness. The paper seeks to determine the relationship that links knowledge management to organizations competitive advantage (Leila et al, 385). Most organizations have made organizational knowledge to be one of their strategic assets. Organizations primarily focus on the use of information technology to execute current organizational structures. The businesses have neglected the need to incorporate the realized knowledge with their operational business practice. Thus the implementation process of knowledge management can be said to be based primarily on matters pertaining to technological management neglecting the corporate strategy (Leila et al, 385). The study reviews literatures that tackle knowledge management in relation to competitive advantage of an organization. The literatures include Porter (1979) ‘5 forces model’, and ‘Wernerfelt’s’ (1984) resource base view of a firm. The relationship between KM and strategy formulation by use of resource-based perception of the organization is established. The applicable literature that links KM with strategies are examined. The paper culminates with research findings, implications and conclusions (Leila et al, 385). Strategy Model of Porters Five Forces Models Porter based his argument on SWOT analysis concept. Porter (1979) views that the five force model depends heavily on the competition level in the industry. The five forces includes; the threats presented by new entrants in the market; suppliers bargaining power; threats offered by the substituting goods, and the jockeying among the existing contestants. When an organization has perfect information pertaining to the existence of the above factors they tend to conquer the market. This is because the organization will devise a strategic plan that counteracts the actions of the competitors. The strategy focuses on external factors that analyzing the opportunities and threats evident in the industry. Barney (1995) views that organizations that utilizes their internal strengths to act on the opportunities at the same time weakening threats and avoiding internal weakness attains a significant vale on competitive competition (Leila et al, 386). Resource Based Firms The theory argues that a firms’ success lies on its ability to incorporate its ability and resources (Wernerfelt, 1984).A firm’s resources must never be easily imitated by the competitors. Various researchers supporting the theory including Penrose (1959), Barney (1991), and Mahoney and Pandian, 1992 asserts that; competitive advantage resources must be valuable, with no substitute and inimitable (Leila et al, 386). A firm resource involves tangible, intangible, human, and machines owned and directed by the organization. The resources allow the organization to plan and execute strategies that adds value to the organization. Resources can either be tangible or intangible, for example, brand names, capital, and in-housed technology amongst others. Resources unique to a company enhance the company’s competitive edge. Most of the times intangible resources provided added value than tangible resources (Leila et al, 387). Knowledge management (KM) Knowledge management receives various definitions and procedures that implement it. Davenport et al views that; knowledge as a blend human perspective and data that provides the information with opportunities for execution. The definitions implies that knowledge requires experience, values, relative information and some relevant expertise that creates a framework that allows examination and implementation of new practices. Knowledge management can also involve a calculated approach that enables the users to find, comprehend and apply knowledge to create value. The customers receive value and quality product from effective knowledge managing organization. The practice enables organizations to enjoy competitive advantage in the market place. Knowledge management utilizes people to achieve a firm’s competitive advantage. The talents of the employees are put into great use to attain productivity. The employees and managers alike realize the methods of optimizing their skills and collective entity (Leila et al, 388). KM and strategy formulation Organizations that values the link that attaches strategy and knowledge, understands their strategic plan and display efforts of trying to fill the gaps that exists between strategy and knowledge requirement (Leila et al, 387). Knowledge remains an organizational asset despite, the challenges encountered in its quantifying and management. John F. Kennedy, the former president of the United States, confirms the power disguised in knowledge during a white house reception celebrating Nobel Prize Winners. When managers and individuals alike, constantly plan and update their core aptitudes, the organizations can attain competence required in the global markets. The moment organization incorporate their knowledge competence of the employees with economic strategies, countries will be able to fully exploit their resources (Leila et al, 388). Knowledge based organization tend s to receive significant market value for their output. The organizations must be sure to incorporate the knowledge strategy with the corporate strategy. Stephen Denning’s narrative on the World Bank depicts how the bank used knowledge management to bring about change to the organization. Though the management style for the bank was bureaucratic, the organization achieved the change of their operating strategy by the use of knowledge management strategy (Leila et al, 389). Findings The process of strategy management involves generating, marking and moving of implied and explicit knowledge throughout the firm. The employees require communication system that enables them to get the precise information at the right time and place. The four main management strategies utilized by managers, organizational consultant, and leaders include leadership, culture, technology and measurement (Leila et al, 390). Implication to managers The article provides the managers with a range of information relating to knowledge management process. Going through the article enables managers to understand the practices required in their field. The article provides the managers with a basis to adapt practices that suit their needs (Leila et al, 391). Conclusion Knowledge management enables organizations to progress. Organizations that adopt knowledge management experiences added competitive outcome and reduces the rates of turnover. Organizations require an adaptation of practices that suits their business needs. Cultures, technologies and business cultures must enable employees to share knowledge for progress. Intellectual resource for the company remains a key driver of success. Executives and practitioners should gear their resources towards reaping of the total advantages presented by KM (Leila et al, 393). Works Cited Leila, Halawi, Richard ,McCarthy, and Jay, Aronson. "Knowledge management and the competitive strategy of the firm", Learning Organization, 13.4 (2006): 384 – 397 Web.12.2013 Read More