UU-MBA-712-MW: Theories of Management & Market Segmentation Discussion
Theories of Management
ASSIGNMENT 2
Discuss with reference to appropriate literature sources, the extent to which the creation, sharing and utilization of knowledge is central to the resource based view of competitive advantage
UU-MBA-712-MW
26/10/2019
INTRODUCTION
In a world where there’s constant change in market segmentation, globalization as well as needs of the community, it is vital for the organizations to be goal oriented on their structure in order to increase their competitive advantage (Gupta and Dasgupta). The illustration or in other terms the break down of the trade barriers galvanized by globalization, has led to intense competition and market expansion, which has led to most organizations to put in more effort in the services they provide. According to Alvesson (2004) says that, the state of the art companies are evolving or in other terms they are developing from the work intensive to the knowledge-based companies, over the past two decades it has been noted that there has been a swift rise in the utilization of knowledge as a factor of production. In simpler terms globalization has motivated most organizations, companies, and entrepreneurs to up their game in order to make a name for their selves. Be that as it may, by adopting strategic management approach, organizations can achieve sustainability. This calls for a diversified approach that involves planning, formulating, implementing as well as the evaluating strategy. This further accelerates the effective administration of an institution’s resources and the managerial functions, as well as revising strategies and eagerly chaperoning or overseeing the endeavours as new plans emerge.
In this day and age entrepreneurs, company owners, shareholders or even a valuable member of staff strives to be the best among the rest, there is nothing more appeasing than to be affiliated with an entity that has a booming competitive edge. For instance, we have companies such as Nike and Adidas which are dominating in the sports industry by producing fabric of high quality such as shoes, clothes etc. they are the most worn sports outfits in this day and age. The insatiable drive for an organization to forge ahead in order to succeed as well as advance in its market has directed every business out there to needing to gain a competitive advantage over its competitors. With that said, this essay mainly seeks to discuss the extent to which knowledge sharing is essential to the RBV in determining/ deriving competitive advantage over the other firms.
COMPETITIVE ADVANTAGE
A company’s competitive edge basically refers to the significant characteristics or attributes a company possess over its rival in the same market in order to surpass them and get first position in that industry. Every firm or industry should at least attain one characteristic or attribute that distinguishes itself from their rivals to conveniently compete in that particular market, there are various things that could be considered as having a competitive edge, since having a competitive advantage cannot be measured in a single way, for instance increased returns in asset, higher profit margin, the brand reputation etc. According to Shahnanawaz and Sajjab in the Journal of management and organizational studies volume 2, issue 1, point out that in businesses you utilize two view points in order to attain and bear competitive advantage which involve Resource Based (RBV) View and Market Based View.
Michael porter has largely contributed to competitive advantage from the 1970s. The concept has been utilized by the companies in various industries in order to be one step ahead of the other rivals. In the authors book entitled Competitive Advantage, creating and sustaining superior performance (1985). According to porter he found out or in other words identified that competitiveness could be used as a strategy that a firm will utilise in order to a move one step ahead of its competitors. Porter further emphasizes on the overall goal of competitive manoeuvre is to possibly handle as well as the transformation of those particular guidelines in the good turn of the corporation. The five forces model for competitive analysis were later introduced by Porter, which mainly are in charge of a firm’s ability to bring in more profit as well as the return on investments basing on the capital allocation in an industry. According to the author he further states that the five forces that play a crucial role in shaping the competitive superiority of a firm include: Possible entry of new rivals, the opposition among competing firms, negotiating power of consumers, discussing influence of suppliers as well as possibly expanding the substitute produce. Every one of these forces tend to have an effect on the operations as well as the competitiveness of institutions and firms when it comes to generating profit. The battle is mostly focused on which firm is better than the other, only the better competitor gains an edge over the other. According to David (2011), he states that, when it comes to analysing the competitive strategies, he highlighted that the companies that do not properly organize themselves as well as enabling their leaders and identifying the staffs and monitoring what kind of activities are being undertaken in that particular institution this would end leading to the implementation of the wrong type of activities thus creating more problems for that particular company. Therefore, adapting and implementation of competitive strategies is crucial to the survival of companies.
According to Smith & Meso (2000) states that competitive edge is only sustainable from cardinal assets, Pandian and Mahoney (1992) state that competitive edge is involved with industry strategy and a company’s effects in the mode of planning and resource advantage. One of a kind type of resources act as a foundation for competitive advantage of a company and this mainly involves tangible as well as intangible assets, and human and non human type of resources that are governed or handled by the institution, these resources tend to vary for instance core qualification, organizational culture, distinctive abilities, invisible assets as well as alternative critical organizational experiences. The resources that are not customary, substituted and cannot be easily duplicated by the other competitors, this makes the company unique in a way as it is the only one of its kind to produce such kin of a product thus leading to acquiring a long lasting competitive edge (Barney, 1991).
the one key prerequisite or necessity for corporate achievement in this competitive environment is by distinguishing on how to sustain the competitive advantage. According to porter (1999), he states that people can create competitive advantage while making tough choices about what will be done and what has not been done. Competitive advantage has been defined as the ability to ear the returns basing on investment consistently which is above the average for the industry (Porter, 1985). According to Van Buren (1999), he states that we reside in the knowledge Age, a new era where you are likely to have a radically different image, as well as entailing a new business compass to traverse (Van Buren, 1999). Activeness plays a crucial role to the success of organizations in this rapidly changing setting.
Knowledge and Resource Based View of Competitiveness
Organizations, companies and firms in the present-day function in what you call a multi- dimensional environment, which leads to effective interaction. The effective interaction tends to lead to organizational change which in return inevitably ends up maintaining competitive edge thus keeping up with any form of progress in the external environment. There are essential factors that are affecting and collaborating with an organization, this both happens internally and externally which can either positively or negatively compel evolution of the organization and also ensures that an organization retains or builds competitive advantage or not. Mot institutions these days tend to manage resources and the materials coming into their organizations. One of the resources that flows into an organization which is crucial is that what is referred to as knowledge, and it basically depends on how it’s created, managed, shared and used by an organization, knowledge can become a powerful source for competitive advantage. In an article entitled “Exploring the Relevance of Case Study Research” Knowledge is described in this aspect:
Knowledge is viewed as something which can be deduced from careful process of hypothesizing, variable identification as well as measurement within experimental designs, resulting in the identification of causality as well as predictions being made about ‘facts’ that have been properly evaluated by mathematical logic. (Dasgupta, 2015, p.147)
Knowledge management is therefore playing a crucial role. All things considered this is an instrument or mechanism whereby an organization has knowledge on the internal and external environmental forces that have a direct or indirect chain reaction on the productivity, employee motivation, resources as well as materials planning, the strategy formulation, objective setting along with implementation, style and management strategy, leadership structures, operations, rivalry management, as well as its culture. All this is critical by virtue of determining what an organization does in particular and what an organization is essentially good at, on the other hand known as its capabilities. With capabilities this helps in determining what sort of values an organization generally creates as well as comprising the system, organization and knowledge, skills along with behaviours to arbitrate its results. Organizations determine the value as well as effective knowledge, sharing and utilization from the capabilities which provides an edge to acquire a resource-based view appertaining to competitive advantage. Due to the multi- dimensional environment this has resulted led to most organizations these days to work in a global setting, and has led to most organizations to be easily affected by global economic developments. This resulted into a change in such a manner where organizations explore in order to add value, thus escaping from Michael Porters approach as engraved by Gerald & Clyde (2008, p. 138) which bases much of its focal point on barriers and monopolies to entry. Porter’s main target is on the resources as well as not forgetting the capabilities to construct monopolies along with utilizing the resources under an institution’s control in order to generate gain. Expanding of the value is acquired by its own capabilities. The resource based view mainly makes sure that an institution becomes more aware and responsive to the accelerated environmental changes that occur externally because it utilizes internal intelligence from its effectiveness while porter on the other hand views of resource as well as capabilities or effectiveness only target all resources on specific opportunity because an institution aims at being on top of the food chain thus making sure that no other rival gains that advantage. This is a risky approach in the sense that an institution sits and basically waits for an opportunity and all the resources are focused on that particular resource than build its own opportunity basing on the analysis on what it is good at. Organizations that utilize knowledge in order to manage their capabilities efficiently are able to assess better ways of managing risks and are able to encounter various competitive threats in a competitive habitat (Jamie et al, 2010 p.947).
An organization is required to ensure that it creates value as well as Knowledge that becomes the centre for formulation of strategies as well as source for profitability in order to maintain a competitive advantage in a resource-based view. The organization that is attained, shared, and used by an institution, will aid in identifying elements for instance durable, scarce, non-transferable, as well as embedded resources that can be utilized with knowledge in order to manage their capabilities in an efficient way and are able to construct competitive advantage. According to Anchalee & Khwanruedee (2017), mainly emphasize on the point that organizations are obligated to exploit their capabilities in order to create knowledge amongst its employees to encourage sharing each other knowledge and use that particular knowledge to build a viable competitive edge.
Knowledge Creation, Sharing and Utilization
According to Dasgupta and Gupta(2009), illustrated that knowledge has developed to be the artifice and fundamental resource company: their emphasis was much on the creation, sharing and utilization of knowledge in respect to resource based view, they further stated that that an organization should possess a large scope of proficiency in order to confront the financial and communal issues that may occur in course of business. Knowledge creation mostly consists of the formation of current theories or ideas for value extension through communication bounded by tacit and explicit organizational knowledge. According to Shongwe (2013 p. 626), who is in line with this illustration, states that Knowledge creation is a value extension output or outcome of a product or service. The modern age institutions are compelled by the external factors such as suppliers, markets, government as well as political , customers, regulators as well as the advanced technologies which can result to a turbulence in the external business habitat, this would convince institutions to implement strategies that would seize both the tacit as well as explicit knowledge and turning it into organizational which can used for creation of distinguishable capabilities which would be utilized to preserve a competitive advantage and later change into wealth creation and profitability.
According to Abel (1997), he believed that when looking at knowledge management it comprises of creating as well as managing an organizational culture which influences the dissemination, constructing along with proper utilization of knowledge which later aids in enhancing the competitive advantage, the acquiring of a descent relevant organizational knowledgeable culture it is essential for management to focus much of its attention on the three area, according to the author these areas are; Organizational preparation, the management of Knowledge assets, as well as manipulation of knowledge to gain a competitive edge. Knowledge system tend to utilize a broad scope of knowledge in order to make concrete choices as well as rectifying some problems. Knowledge systems utilises the advanced technology of today for instance: software’s, internet etc., however the information-based systems are made in order to just aid in facilitating the growth of the organizational knowledge procedure in the creating, collection and utilization of course. Bearing this in mind it is crucial for institutions cultivate a unified approach towards production as well as innovation of course in a business environment, in organizations we have technologies that are affordable and easily assessible plus fit to be operational in an organization, in order for the right tools to be given to the employees there is the need for an organization to share the knowledge. Knowledge management is crucial in an organization as it makes sure that the necessary information is easily accessible to the employees when it is required, knowledge is kept in the firm even if the workers are not working in there anymore, this is done to make sure to avoid duplicate efforts, standardized methods and processes, this ends up resulting to growth as well as innovation stimulation, plus it is easier as well as faster o make decisions.
In addition, Knowledge creation, sharing and utilization should mainly be rendered across the functions of an institution to safeguard that all the departments have the right tools when it comes to dealing with competitiveness. According to David (2011). His main analysis was on the strategic management as an extreme development which mainly requires that there is operational harmonization throughout the administration, finance, research and development etc. the author further articulates that failure to allocate and assimilate relation amongst the functional parts of the business can prove to be unfavourable. This give rise to the need for knowledge sharing between departments and any other functional areas is crucial for competitive advantage. Creation, sharing and utilization plays a fundamental part as it aids in tying business units as one for instance information sharing which also aids in building up decision making
Communication
In this current generation, communication has been made easier through one obvious means ‘the internet’. It is a vital aspect for any organization as there is improved communication with the addition of the social aspects of course. With the help of the internet employees are able to look up their organizational requirements so as to carry tasks for their job much more effectively and efficiently, in order for this to take place there are strategies that are put in place such as: expansion of areas that would benefit and increase clients, work auditing for any improvements at the work place etc. with communication you can also learn better and efficient ways on how one can improve on ones business so as to move forward.
In conclusion throughout the context it has been noted that competitiveness plays a compelling role for the organizations to forge ahead in order to survive against competitors, the rivals. Resource based view is crucial in order for companies to stay competitive. We can not talk about resource-based view without emphasizing on creation, sharing and utilization. One other vital aspect is the flow of information should be preserved which normally happens within and outside various functions, thus communication flow she be tasked with the responsibility to govern and make certain that there is no information leaks or gaps and the achievement of positive results so that an organization can always be one step ahead of the competitors.
References
- K. & Khwanruedee, T. (2017). Knowledge capability in health care organization. Emerald Group Publishing Limited, 11 (2), 135 – 151. Retrieved from:
https://www.search.proquest.com/central/docview/1901205745/fulltextPDF
- Alvesson, M. (2004). Knowledge work and knowledge-intensive firms. OUP Oxford.
- Barney, J. (1991). Firm Resources and Sustained Competitive advantage. Journal of Management, 17 (1), Pp 99 – 120. Retrieved from: http://.academia.edu
- Dasgupta, M. (2015). Exploring the relevance of case study research. Sage Publications, 19 ( 2 ), 147 – 160.
- R, (2011). Strategic management concepts and cases, (13th ed). New Jersey: Prentice Hall.
- Gerald, E.E., & Clyde, N. (2008). The use of strategic forces to understand competitive advantages, Provided by information and technology. International information Management Associations. 17, 111 – 137. Retrieved from:
https://www.search.proquest.com/docview/205859881?accountid=1888730
- Jamie et al. (2010). Knowledge management supply chain technologies, and firm performance. Emerald Group Publishing Limited.
- Porter, M.E. (1985). Competitive advantage. The free press, Ney York.
- Van Buren, M.E., (1990). A yardstick for knowledge management. Training & Development, Vol 53, No. 5, Pp. 71 – 78.
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