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Competitive advantage

A. B. Sivakumar

MICHAEL Porter, Professor of Strategy at the Harvard Business School, was the genius who gave the world the concept of Competitive Advantage through his publications, Competitive Strategy, Competitive Advantage, and the Competitive Advantage of Nations.

Porter was the first to point out that the analysis of competitive advantage had to proceed not at the level of the company as a whole, but at the level of the discrete activities a firm performs in designing, producing, marketing, delivering and support ing its product. These activities could add up to producing for the company a `value chain' which, by its very nature, would make it difficult for any new competitor to think of entering the industry, imposing thereby, on the potential competitors, what are called `entry barriers'.

Competitive advantage merely means that the organisation is miles ahead of the nearest competitor, and in today's globalised environment, makes the particular organisation number one or two in the particular industry it operates in. There are excellent e xamples of Indian organisations that possess viable competitive advantages -- where the particular organisation is several notches above its nearest rival.

For instance, the formidable might of Hindustan Lever's marketing strength. It clearly has a great competitive advantage, due to its large distribution network, its world-class managers, its ability to be nimble-footed at all times, and its ability to ch ange at amazing speed, apart from its professional market research strengths.

Similarly, TVS-Suzuki, a market leader in the ever-growing moped segment and a formidable competitor in motorcycles, has several competitive advantages -- good brand loyalty, indigenous technological capabilities, world-class marketing strengths, and vis ionary leadership.

Aligned to the concept of competitive advantage is that of core competence, which refers to a bundle of skills and technologies that are very difficult for a competitor to emulate or understand, much less copy. For instance, the zero-defect record of Sun dram Fasteners, or excellent financial management skills of Sundaram Finance or the world-class software capabilities of Infosys Technologies, are all examples of core competencies, built over a period of time, and the result of remaining focussed on par ticular areas. Core competency also means that the organisation does not dabble in too many activities or products at the same time. This is why the Tata and Birla groups, for example, are fast moving out of their non-core areas -- product segments where they can never attain competitive advantages.

Strategy is now synonymous with business excellence. Without a sound strategy, an organisation cannot exist at all. To strive for competitive advantages, an organisation should adopt strategies that always keep it completely focussed. The strategies of g urus such as Prof. C. K. Prahalad, whose concept of core competence has been internalised by many organisations the world over, should be effectively used if Indian organisations have to survive in these turbulent times.