The Four Building Blocks of Competitive Advantage - Essay Example

Competitive advantage cannot be successfully achieved without efficiency, quality, innovation, and customer responsiveness as the foundation of the business.Efficiency means being able to produce more outputs than the competition at a much lower price for inputs. The end result of being able to achieve this is having a cost advantage over the competition. Cost advantages give the business opportunities to consider flexible pricing structures as they can now provide products at a much lower input cost.

Efficiency could be achieved by setting up a lean production system that uses less physical raw resources and also reduces reliance on labor payments for manufacturing. A business might be able to find, through strategic alliances along the supply chain, opportunities for volume discounts on raw product procurement. This represents lower input costs to achieve the same or higher outputs.Quality is a very important dimension for achieving a competitive advantage. A business that provides products and services must consider how to improve customer satisfaction by meeting or exceeding market preferences.

Quality can mean producing outputs with absolutely zero defects. A zero-defect production strategy translates into much less labor to have to fix production problems associated with the product and can sometimes even lead to being able to provide products to customers at a much lower price. A quality product, such as one that is produced under total quality management (TQM) philosophy, has a much greater chance of satisfying customers and giving the business a positive brand reputation over that of competition that is unable to keep defects (or general quality) from happening regularly in their production systems.

Innovation represents being able to provide products or services that are unique as compared to the competition in the market. Until competition is able to mimic the innovation, it can provide sustainable profit that is not achievable by competing companies. Innovation might not always be about the product, it could be about human capital talent development or a specific, unique production process that is not found in competition in the same industry.