Michael Porters Competitive Advantage - Coursework Example

The theory of ‘competitive advantage’ was pioneered by Michael E. Porter. It is defined to be the advantage gained by the firm(s), industry(s) and even nation(s) in the global as well as national corporate philanthropy that assists the company to distinguish itself from its rivals (O’Shaughnessy, 1996). As stated by experts, the conception of ‘competitive advantage’ depends on various attributes such as market size, rivals in the market, industry structure and economic fluctuations among others.

Thus, the concept tends to be broad and quite significant in the modern-day phenomenon (Porter, 1990). It is in this context that the tendency of homogeneity in the demand of products influences the industry players to concentrate on heterogeneity in a rapidly growing manner. This fuels up the essentiality of competitive advantage in the current market situation (Wiggins, 1997). Therefore, the competitive advantage of a firm in the modern-day context depends largely on the firm’s performance as steered by its leader.

In the 21st century context, it is the organisational leaders who play a major role in directing the organisational performance towards the achievement of competitive advantage. The fact is considered to be quite significant as competitive advantage provides with numerous opportunities to the companies to sustain in the market. Thus, it can be stated that the achievement of success along with failure in terms of competitive advantage depends on the organisational leadership (Ireland & Hitt, 2005).

Porter (1998) observed, “A firm in a very attractive industry may still not earn profits if it has chosen a poor competitive position. Conversely, a firm in an excellent competitive position may be in such a poor industry that it is not very profitable, and further efforts to enhance its position will be of little benefit” (pp. 2). The fact stated by Michael Porter can be apparently witnessed in the current industry structure of the corporate world. For example, Dixons Retail can be observed as a global company that belongs to an attractive market, i.e. international technology retail industry, but lacks in achieving competitive advantage in its targeted market.

The company is recognised to include itself among the largest retail networks of the technology industry in the European countries (Dixons Retail, 2010). Despite its market size, the company witnessed significant declination in its profit structure, especially in the electronics retail market. Although the market was reported to be strongly affected by the global economic fluctuation, it is still considered to be among the most attractive retail markets from a future perspective (Gordon, 2011).

The causes of these issues can be identified in terms of ineffective leadership decisions such as weak promotional activities, ineffective pricing strategies with due consideration to the market trends. This led to the overall decline in the company’s competitive structure (Dixons Retail, 2010). Thus, the company was forced to adopt retrenchment strategies which again hampered its competitive advantage (Gordon, 2011). Alternatively, Thorntons is recognised to be a strong competitor for the industry players in the international chocolate manufacturing and retailing market.

However, the company’s competitive advantage has been witnessed to be declining significantly due to the fluctuations within the industry (BBC, 2011). It is worth mentioning that the company offers a wide range of products and services to its customers along with effective promotional offers which are intended to enhance the market share of the company (Thorntons, n.d.).