The Ways Of Competitive Advantage Development - Assignment Example

The Ways Of Competitive Advantage Development Reijonen et al (2012:713) suggest, “The elements of market orientation and brand orientation play a significant role in enhancing firm performance.” Critically analyze how SMEs can use brands to develop competitive advantage using examples and relevant literature. Small and medium enterprises exhibit a variation in terms of market orientation as well as brand orientation. A critical assessment of the growing, stable, and declining SMEs reveals considerable differences in terms of strategy and policy formulation to respond to the contemporary market trends (Reijonen 2012). Apparently, the growing SMEs have extensively adopted the market orientation and brand orientation as compared to stable or declining SMEs. The orientations are vital to the process of realizing various forms of growth goals among SMEs in the short run and long run. In particular, the market orientations influence the enterprise’s decisions regarding market choice, production level, and planning. The small and medium enterprises require more information as well as training on issues related to market and brand orientations to support growth (Reijonen 2012). The government through its trade and finance departments, play significant role in making sure all SMEs obtain relevant information about the orientations. In addition, commercial banks, investment banks, and other financial institutions help the enterprises through provision of credit facilities and guidance on feasible investment destinations (Reijonen 2012). The most significant aspect of orientation is developing a comprehensible understanding of how SMEs perceive and put the concept of marketing into practice. The practices of SMES will determine their distinctive size, industry or even the crop of customers. Enterprises have adopted unique policies and practices that have ensure their stability or growth. Bad decisions have resulted to decline in the performance of certain SMEs. However, the government play important role to the process of ensuring all SMEs have equal opportunities to expand if they have attained all legal formalities (Reijonen 2012). Market orientation is a business approach whose focus is to identify and meet the affirmed wants or needs of prospective customers. According to the philosophy of market orientation, all SMEs must create strategies and policies that are in consensus with the changing demands and expectations of consumers within its niche in the market (Porter & Kramer 62). These enterprises are vital to the process of driving innovation and competition not only in the US but also in the world at large. They are arguably the backbone of major economies of the world, US included. The enterprises provide the biggest chunk of employment opportunities to Americans (Porter & Kramer 2011). Besides, they account for the largest group of exporters in the US and largely rely on imported goods for production processes. The market outlook compliments the market orientation towards examining and resolving poor performance in the past, consumer demand, existing economic aspects, and business opinion. Interactions between market orientation and brand orientation will either promote or derail the competitive advantage of SMEs (Porter & Kramer 2011). The brand orientation is identity-driven and always views the brand as the hub for a business organization together with its strategy. For enterprises whose major concern is brand orientation, it is inevitable to design brands that excel in the market against competitor’s which then appear less superior (Porter & Kramer 2011). Brand orientation is a costly process since it demands extensive and all-inclusive consultations. In contrast, market orientation is image-driven. The image of an organization will determine whether it is marketable and has incredible niche in the highly competitive market. Over the past few decades, brand orientation and market orientation appeared to have diverse strategic options. However, the perception has changed over the years with SMES increasingly taking the lead in upholding consensus building between the two forms of orientation. Previous theories did not fully explore the strategic options neither did they label the orientation strategies as part of the branding practice and philosophy (Porter & Kramer 2011). Figure 1: The market and brand oriented approaches (The Egg Model) Figure 2: The brand and orientation matrix with the examples of evolutions of various brands The Slovenian small and medium enterprises (SMEs) have invested resources to enhance branding and branding strategy. Apparently, these SMEs have advanced efforts to build competitive strategies on powerful branding especially in the global consumer markets (Nicholson & Blakemore 2002). Nevertheless, the SME nurture their approach to branding development. Based on researcher’s own experience and extensive literature survey, it becomes much easier to determine the branding development attitude among SMEs. Since the SMEs contribute significantly to the gross domestic product (GDP) of any country, export performance and national job creation, it is important that they organizations should work closely with the government in developing procedures and policies that facilitates better performance and increase in the output volume (Nicholson & Blakemore 2002). The government relies on SMEs for revenues, provision of employment opportunities to its young educated population, and boosting performance of the country’s exports in the international markets. Exports earn the government as well as SMEs foreign exchange that is crucial in speeding up development processes across the country (Nicholson & Blakemore 2002). The government should consult small and medium enterprises widely before making decisions that have substantial effect on future prospects of SMEs and the economy in general. SMEs have a competitive advantage in the market because they are innovative, flexible, and more entrepreneurial. In addition, they have more opportunities that allow them to get closer to potential customers (Jones, Oswald & Tilley 2003). Brand orientation provides the product with a symbol or name and in the end boost credulity of the product. It further helps consumers identify the product notwithstanding presence of a wide variety of other products from the organizations together with those of its competitors. The orientation is a remarkable strategy towards giving meaning and defining product identity. However, brand orientation is a new scheme among corporate bodies and multinationals as their focus has been to promote existing brands through comprehensible marketing and promotion. SME managers would attest to the reality of brand orientation boosting the performance of the enterprise as well as promote customer relationships (Jones, Oswald & Tilley 2003). It is incumbent upon governments and financial institutions to assist SMEs in the field of marketing, brand orientation and strategic orientation through initiating different public support programs for all SMEs. They should also take into consideration, the maturity and phase of development of each SME in enhancing performance (Jones, Oswald & Tilley 2003). Researchers across the globe concur about the significant role that brands have played to create competitive advantage of SMEs against brands or commodities of the competitors in the local and international markets (Levitt 1983). Oswana Jones and Fiona Tilley (in their book, ‘Competitive Advantage in SMEs: Organizing for Innovation and Change’, the small and medium enterprises are commercially viable since they have the capacity to supply goods and services to local customers if need be. In effect, they promote the quality of life of the locals. If such enterprises become more innovative, more people becomes attracted to the area thereby increasing demand or interest in local products. The SMEs’ ability and willingness to adopt new technologies would determine their success levels (Levitt 1983). Organizations with better technologies will prosper faster as compared to those that still rely on the ancient forms of technology. The Blue Lagoon, a fashion shop in England (North West part of England), sells casual wear for men and women. They also sell relatively expensive designer wear specifically for women besides having a coffee shop on the premises. The enterprise first introduced Information technology (IT) in 1993, which was an important tool for regular record keeping of all their customers (Levitt 1983). In his book, Elecronic Commerce in Small and Medium-sized Enterprises: Frameworks and Policy issues, Nabeel Al-Qirim examines and analyzes the fundamental elements that have contributed to growth of small and medium enterprises. He pointed out the effects of internet on the operations of business enterprises (Levitt 1983). The web environments allow customers to search and find new sources of supply as well as competitive information. Conventionally, SMEs have enjoyed competitive advantage over other larger competitors. Apparently, SMEs stepped up their strategy to develop strong connections with customers and using efficient scheme to customize their offerings. They have also enhanced their stake in both the local and international platform by targeting the niche markets. The niche markets have categorically boosted consumer confidence as well as the capacity of the enterprise to explore new markets. Through brand orientations, small and medium enterprises have ensured they triggered efficient and competency of their production tools in the wake of globalization (Levitt 1983). The small and medium organizations have experienced many challenges in their bid to transform the business arena locally and in the international front. Weak supply chain, lack of expertise, barriers to international trade and lack of awareness of the management processes have emerged as the primary hurdles that have curtailed the ambitions of most SMEs (Nicholson & Blakemore 2002). Government Policy on international trade tends to favor public corporations and large-scale enterprises. The regional blocs are also silent on the role of small and medium enterprises in promoting trade and production flow across the country and region. However, this trend is fast changing with the state and countries acknowledging the role that SMEs play in to production, building customer relations, developing and applying new forms of technology (Nicholson & Blakemore 2002). The SMEs create brand dominance through investing in innovative services. The service would ultimately generate strong equity for the brands primarily through the social networks as well as social media. Given the realism about their small size, SMEs are capable to relate better as well as appreciate the needs of their esteemed clients or customers. In addition, persistent building of brand has enhanced the process of defining the organization especially in the public eye. Direct marketing strategies alongside brand building to the SMEs expenditure and marketing mix (Hoyer et al 2010). The social media is particularly emerged as one of the efficient avenues through which organizations step up their efforts to gain recognition amid stiff competition from the large organizations. The organization’s culture and values must support the brand image. In essence, a properly structures strategic planning process advocates for brand strategy besides developing integrative marketing and sales promotion programs. These elements must align with the fundamental organization strategy along with facilitating the process of creating brand value. The branding ideology is an important component to the process of distinguishing between the level of performance of different small and medium enterprises (Hoyer et al 2010). Reference Jones, Oswald & Tilley, Fiona (2003), Competitive Advantage in SMEs: Organizing for Innovation and Change. Joh Wileys & Sons Limited. 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The Impact of Resource on Smes: Critical Perspective. Bradford, England: Emerald Group Pub. Internet resource. Levy, Margi. Strategies for Growth in Smes: The Role of Information and Information Sytems. Burlington: Elsevier, 2004. Internet resource. LUNATI, M. T., DEMBINSKI, P. H., & FARINELLI, F. (2008). Enhancing the role of SMEs in global value chains. Paris, OECD. Read More