In business, a competitive advantage is an attribute that allows an organization to outperform its competitors .
62-690: A competitive advantage may include access to natural resources , such as high-grade ores or a low-cost power source, highly skilled labor, geographic location, high entry barriers, and access to new technology and to proprietary information. The term competitive advantage refers to the ability gained through attributes and resources to perform at a higher level than others in the same industry or market (Christensen and Fahey 1984, Kay 1994, Porter 1980 cited by Chacarbaghi and Lynch 1999, p. 45). The study of this advantage has attracted profound research interest due to contemporary issues regarding superior performance levels of firms in today's competitive market. "A firm
124-481: A differentiation advantage. A cost advantage arises when a business can provide the same products and services as its competitors but at a lower cost. A differentiation advantage arises when a business can provide different products and services from its competitors which are more closely aligned to customers' needs. In Porter's view, strategic management should be concerned with building and sustaining competitive advantage. Competitive advantage seeks to address some of
186-439: A book in 1985 which identified three strategies that businesses can use to tackle competition. These approaches can be applied to all businesses whether they are product-based or service-based. He called these approaches generic strategies. They include cost leadership, differentiation, and focus. These strategies have been created to improve and gain a competitive advantage over competitors. These strategies can also be recognized as
248-401: A business's products or services are different from its competitors. In his book, Michael Porter recommended making those goods or services attractive to stand out from their competitors. The business will need strong research, development, and design thinking to create innovative ideas. These improvements to the goods or service could include delivering high quality to customers. If customers see
310-452: A certain rate and natural processes will restore them. In contrast, many extractive industries rely heavily on non-renewable resources that can only be extracted once. Natural resource allocations can be at the centre of many economic and political confrontations both within and between countries. This is particularly true during periods of increasing scarcity and shortages ( depletion and overconsumption of resources). Resource extraction
372-458: A company achieves this goal, it allows it to shape the evolution of an end market. An unfair competitive advantage may arise to the benefit of one or more businesses operating within a competitive context, for example in public procurement if one bidder has access to information not available to other bidders. Natural resources Natural resources are resources that are drawn from nature and used with few modifications. This includes
434-901: A country's wealth; however, a sudden inflow of money caused by a resource boom can create social problems including inflation harming other industries (" Dutch disease ") and corruption, leading to inequality and underdevelopment, this is known as the " resource curse ". Extractive industries represent a large growing activity in many less-developed countries but the wealth generated does not always lead to sustainable and inclusive growth . People often accuse extractive industry businesses as acting only to maximize short-term value, implying that less-developed countries are vulnerable to powerful corporations. Alternatively, host governments are often assumed to be only maximizing immediate revenue . Researchers argue there are areas of common interest where development goals and business cross. These present opportunities for international governmental agencies to engage with
496-628: A firm to superior performance by facilitating the firm with competitive advantage to outperform current or potential players (Passemard and Calantone 2000, p. 18). To gain competitive advantage, a business strategy of a firm manipulates the various resources over which it has direct control, and these resources have the ability to generate competitive advantage (Reed and Fillippi 1990 cited by Rijamampianina 2003, p. 362). Superior performance outcomes and superiority in production resources reflect competitive advantage (Day and Wesley 1988 cited by Lau 2002, p. 125). The quotes above signify competitive advantage as
558-461: A major source of social unrest and conflicts in developing nations. At present, there is a particular concern for rainforest regions that hold most of the Earth's biodiversity. According to Nelson, deforestation and degradation affect 8.5% of the world's forests with 30% of the Earth's surface already cropped. If we consider that 80% of people rely on medicines obtained from plants and 3 ⁄ 4 of
620-468: A new hall that was funded by a US$ 30 million donation by the family of the late Ruth Mulan Chu Chao , whose four daughters all attended Harvard Business School. The Executive Education quad currently includes McArthur, Baker, and Mellon Halls (residences), McCollum and Hawes (classrooms), Chao Center, and Glass (administration). Most of the HBS buildings are connected by a color-coded basement tunnel system which
682-421: A product or service as being different from other products, consumers are willing to pay more to receive these benefits. Focus strategy ideally tries to get businesses to aim at a few target markets rather than trying to target everyone. This strategy is often used for smaller businesses since they may not have the appropriate resources or ability to target everyone. Businesses that use this method usually focus on
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#1732852772579744-498: A product or service in a manner that is different, meaningful, and based on their customers' needs and desires. Deciding on the appropriate price and quality depends on the business's brand image and what they hope to achieve in relation to their competition. Positioning is an important marketing concept. The main purpose of positioning is often to create the right perceptions in comparison to competitors. Thus, it creates competitive advantage. This positioning, or competitive advantage,
806-400: A reasonable profit on each good or service sold. If businesses are not making a large enough profit, Porter recommends finding a lower-cost base such as labor, materials, and facilities. This gives businesses a lower manufacturing cost over those of other competitors. The company can add value to the customer via transfer of the cost benefit to them. A differentiation advantage is gained when
868-507: A resource-based advantage, such as manufacturing processes, technology, or market-based assets such as knowledge of customers or processes for new product development. Firms with a knowledge-based core competency can increase their advantage by learning from "contingent workers" such as technical experts, consultants, or temporary employees. Those outsiders bring knowledge inside a firm, such as sharing understanding of competing technologies. Moreover, interactions with contingent workers can provoke
930-480: A strategic advantage for building a core competency. The competitiveness of a company is based on the ability to develop core competencies. A core competency is, for example, a specialised knowledge, technique, or skill. Yang (2015) concluded, with the examination of a long-term development model, that developing core competencies and effectively implementing core capabilities are important strategic actions for any enterprise in order to pursue high long-term profits. In
992-515: Is a type of land management that seeks to conserve , protect and restore habitat areas for wild plants and animals , especially conservation reliant species , and prevent their extinction, fragmentation or reduction in range . Natural resource management is a discipline in the management of natural resources such as land, water , soil , plants , and animals —with a particular focus on how management affects quality of life for present and future generations. Hence, sustainable development
1054-529: Is also a major source of human rights violations and environmental damage. The Sustainable Development Goals and other international development agendas frequently focus on creating more sustainable resource extraction, with some scholars and researchers focused on creating economic models, such as circular economy , that rely less on resource extraction, and more on reuse , recycling and renewable resources that can be sustainably managed. There are various criteria for classifying natural resources. These include
1116-438: Is another factor causing depletion of natural resources. For example, the depletion of nutrients in the soil due to excessive use of nitrogen and desertification . The depletion of natural resources is a continuing concern for society. This is seen in the cited quote given by Theodore Roosevelt , a well-known conservationist and former United States president, who was opposed to unregulated natural resource extraction. In 1982,
1178-479: Is based on creating the right "image" or "identity" in the minds of the target group. This positioning decision exists of selecting the right core competencies to build upon and emphasize. Therefore, both corporate identity and core competencies are underlying internal factors of competitive advantage. The operational model for managing corporate reputation and image of Gray and Balmer (1998) proposes that corporate identity , communication , image, and reputation are
1240-501: Is considered a sustainable development issue. The term sustainable development has many interpretations, most notably the Brundtland Commission's 'to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs'; however, in broad terms it is balancing the needs of the planet's people and species now and in the future. In regards to natural resources, depletion
1302-399: Is defined as the long term plan of a particular company in order to gain competitive advantage over its competitors in the industry. It is aimed at creating defensive position in an industry and generating a superior ROI ( return on investment ). American academic Michael Porter defined two ways in which an organization can achieve competitive advantage over its rivals: a cost advantage and
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#17328527725791364-417: Is followed according to the judicious use of resources to supply present and future generations. The disciplines of fisheries, forestry, and wildlife are examples of large subdisciplines of natural resource management. Management of natural resources involves identifying who has the right to use the resources and who does not to define the management boundaries of the resource. The resources may be managed by
1426-596: Is of concern for sustainable development as it has the ability to degrade current environments and the potential to impact the needs of future generations. "The conservation of natural resources is the fundamental problem. Unless we solve that problem, it will avail us little to solve all others." Theodore Roosevelt Depletion of natural resources is associated with social inequity . Considering most biodiversity are located in developing countries, depletion of this resource could result in losses of ecosystem services for these countries. Some view this depletion as
1488-430: Is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player" (Barney 1991 cited by Clulow et al.2003, p. 221). Competitive advantage is the leverage a business has over its competitors. This can be gained by offering clients better and greater value. Advertising products or services with lower prices or higher quality piques
1550-546: Is the graduate business school of Harvard University , a private Ivy League research university . Located in Allston, Massachusetts , HBS owns Harvard Business Publishing , which publishes business books, leadership articles, case studies , and Harvard Business Review , a monthly academic business magazine. It is also home to the Baker Library/Bloomberg Center , the school's primary library. The school
1612-655: Is the scientific study of the nature and status of Earth's biodiversity with the aim of protecting species , their habitats , and ecosystems from excessive rates of extinction . It is an interdisciplinary subject drawing on science, economics and the practice of natural resource management . The term conservation biology was introduced as the title of a conference held at the University of California, San Diego , in La Jolla, California, in 1978, organized by biologists Bruce A. Wilcox and Michael E. Soulé . Habitat conservation
1674-569: The United Nations developed the World Charter for Nature , which recognized the need to protect nature from further depletion due to human activity. It states that measures must be taken at all societal levels, from international to individual, to protect nature. It outlines the need for sustainable use of natural resources and suggests that the protection of resources should be incorporated into national and international systems of law. To look at
1736-552: The private sector and host governments through revenue management and expenditure accountability, infrastructure development, employment creation , skills and enterprise development , and impacts on children, especially girls and women. A strong civil society can play an important role in ensuring the effective management of natural resources. Norway can serve as a role model in this regard as it has good institutions and open and dynamic public debate with strong civil society actors that provide an effective checks and balances system for
1798-406: The 1971-built Burden Hall with a 900-seat auditorium. In the fall of 2010, Tata related companies and charities donated $ 50 million for the construction of an executive center. The executive center was named as Tata Hall, after Ratan Tata (AMP, 1975), the chairman of Tata Sons . The total construction costs have been estimated at $ 100 million. Tata Hall is located in the northeast corner of
1860-476: The HBS campus. The facility is devoted to the Harvard Business School's Executive Education programs. At seven stories tall with about 150,000 gross square feet, it contains about 180 bedrooms for education students, in addition to academic and multi-purpose spaces. Kresge Way was located by the base of the former Kresge Hall, and is named for Sebastian S. Kresge . In 2014, Kresge Hall was replaced by
1922-476: The International Economy; Entrepreneurial Management; Finance; General Management; Marketing; Negotiation, Organizations and Markets; Organizational Behavior; Strategy; and Technology and Operations Management. Older buildings include the 1927-built Morgan Hall, named for J.P. Morgan , and 1940-built Loeb house, named for John L. Loeb Sr. and his son, (both designed by McKim, Mead & White ), and
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1984-476: The United Kingdom, delivering six-week Advanced Management Program courses alongside local staff at Durham in 1964, Bangor in 1965 and at Strathclyde in 1966. It also brought in professors from the newly founded British business schools to see how teaching was carried out at Harvard via an International Teachers Program. In 2012–2013, HBS administration implemented new programs and practices to improve
2046-406: The ability to create such a relatively unique advantage. Johnson and Foss have provided a formal account of what constitutes an optimal business strategy. According to well-established variational methods, a business pursuing an optimal strategy will follow the shortest economic path that makes the most efficient use of resources. Michael Porter, a professor at Harvard Business School , wrote
2108-453: The ability to stay ahead of present or potential competition. Also, it provides the understanding that resources held by a firm and the business strategy will have a profound impact on generating competitive advantage. Powell (2001, p. 132) views business strategy as the tool that manipulates resources and creates competitive advantage. Hence, a viable business strategy may not be adequate unless it possesses control over unique resources that have
2170-459: The comparative advantage and the differential advantage. Cost leadership is a business's ability to produce a product or service that will be at a lower cost than other competitors. If the business is able to produce the same quality product but sell it for less, this gives them a competitive advantage over other businesses. Therefore, this provides a price value to the customers. Lower costs will result in higher profits as businesses are still making
2232-460: The corporate identity; they form the foundation of corporate competitiveness. Core competencies fit within the " resource-based view of the firm ". Resources can be tangible or intangible. A firm's knowledge assets are an important intangible source of competitive advantage. For firm knowledge to provide a competitive advantage, it must be generated, codified, and diffused to others inside the organization. Many different types of knowledge can serve as
2294-581: The criticisms of comparative advantage . Competitive advantage rests on the notion that cheap labor is ubiquitous and natural resources are not necessary for a good economy. The other theory, comparative advantage, can lead countries to specialize in exporting primary goods and raw materials that trap countries in low-wage economies due to terms of trade. Competitive advantage attempts to correct this issue by stressing on maximizing scale economies in goods and services that garner premium prices (Stutz and Warf 2009). Successfully implemented strategies will lift
2356-519: The end, real advantage can be created by the management's ability to unify corporate-wide technologies and production skills into competencies that capacitate individual businesses to adapt quickly to changing opportunities. To sustain leadership in a chosen core competency area, companies should seek to maximize their competency factors in the core products like being important in positioning its values, distinctive (differentiated), superior, communicable (visibility), unique, affordable, and profitable. When
2418-515: The environment. Every man-made product is composed of natural resources (at its fundamental level). A natural resource may exist as a separate entity such as freshwater, air , or any living organism such as a fish, or it may be transformed by extractivist industries into an economically useful form that must be processed to obtain the resource such as metal ores , rare-earth elements , petroleum , timber and most forms of energy . Some resources are renewable , which means that they can be used at
2480-569: The experience of female students and recruit more female professors. HBS established nine global research centers and four regional offices and functions through offices in Asia Pacific (Hong Kong, Shanghai, Singapore), United States (San Francisco Bay Area, CA), Europe (Paris, opened in 2003), South Asia (India), Middle East and North Africa (Dubai, Istanbul, Tel Aviv), Japan and Latin America (Montevideo, Mexico City, São Paulo). As of 2022, HBS
2542-436: The firm to codify knowledge that was tacit in order to communicate with the temporary employees. The benefits of these interactions with outsiders increases with the "absorptive capacity" of the firm. However, there is some risk that these interactions cause leakage or dilution of knowledge assets to others who later hire the same temporary employees. Modern knowledge management theory now suggests that serendipity can be tapped as
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2604-453: The fundamental components of the process of creating competitive advantage. Corporate identity through corporate communication creates corporate image and reputation, with an end result of competitive advantage. Corporate identity is the reality of an organization. It refers to the distinct characteristics or core competencies of the organization. It is the mental picture of the company held by its audiences. Corporate communication refers to all
2666-560: The government as in Norway's case, natural resources can actually be a factor in whether a civil war starts and how long the war lasts. In recent years, the depletion of natural resources has become a major focus of governments and organizations such as the United Nations (UN). This is evident in the UN's Agenda 21 Section Two, which outlines the necessary steps for countries to take to sustain their natural resources. The depletion of natural resources
2728-493: The government's management of extractive industries, such as the Extractive Industries Transparency Initiative (EITI), a global standard for the good governance of oil, gas and mineral resources. It seeks to address the key governance issues in the extractive sectors. However, in countries that do not have a very strong and unified society, meaning that there are dissidents who are not as happy with
2790-647: The importance of protecting natural resources further, the World Ethic of Sustainability, developed by the IUCN , WWF and the UNEP in 1990, set out eight values for sustainability, including the need to protect natural resources from depletion. Since the development of these documents, many measures have been taken to protect natural resources including establishment of the scientific field and practice of conservation biology and habitat conservation, respectively. Conservation biology
2852-426: The interest of consumers. This is the reason behind brand loyalty , or why customers prefer one particular product or service over another. Value proposition is important when understanding competitive advantage. If the value proposition is effective, that is, if the value proposition offers clients better and greater value, it can produce a competitive advantage in either the product or service. Competitive strategy
2914-432: The middle", and the business will not be able to have a competitive advantage. When businesses can find the perfect balance between price and quality, it usually leads to a successful product or service. A product or service must offer value through price or quality to ensure the business is successful in the market. To succeed, it is not enough to be "just as good as" another business. Success comes to firms that can deliver
2976-404: The nature of the shared resources, the individuals who are affected by the rules can participate in setting or changing them. The users have rights to devise their own management institutions and plans under the recognition by the government. The right to resources includes land, water, fisheries, and pastoral rights. The users or parties accountable to the users have to actively monitor and ensure
3038-476: The needs of the consumer. Porter believes that once businesses have decided what groups they will target, it is essential to decide if they will take the cost leadership approach or differentiation approach. Focus strategy will not make a business successful. Porter mentions that it is important to not use all 3 generic strategies because there is a high chance that companies will come out achieving no strategies instead of achieving success. This can be called "stuck in
3100-410: The needs of the customer and how their products or services could improve their daily lives. In this method, some firms may even let consumers give their inputs for their product or service. This strategy can also be called the segmentation strategy, which includes geographic, demographic, behavioral, and physical segmentation. By narrowing the market down to smaller segments, businesses are able to meet
3162-409: The official and informal communication sources, through a variety of media, by which the company outsources its identity to its audiences or stakeholders. Corporate communication is the bridge between corporate identity and corporate image or reputation. The above-stated process has two main objectives, namely to create the intended image in the minds of the company's principal constituents and managing
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#17328527725793224-708: The one-year program (by then known as the Harvard-Radcliffe Program in Business Administration) were permitted to apply to join the HBS MBA program as second-years. In December 1962, the faculty voted to allow women to enter the MBA program directly. The first women to apply directly to the MBA program matriculated in September 1963. Harvard Business School played a role in the founding of the first business schools in
3286-425: The process to create a favourable reputation in the minds of the important stakeholders. Gray and Balmer (1998) say that a strong image can be built through a coordinated image-building campaign and reputation, on the other hand, requires a praiseworthy identity that can only be shaped through consistent performance. A core competency is a concept introduced by Prahalad and Hamel (1990). Core competencies are part of
3348-591: The source of origin, stages of development, renewability and ownership . Resource extraction involves any activity that withdraws resources from nature. This can range in scale from the traditional use of preindustrial societies to global industry. Extractive industries are, along with agriculture, the basis of the primary sector of the economy. Extraction produces raw material , which is then processed to add value . Examples of extractive industries are hunting , trapping , mining , oil and gas drilling , and forestry . Natural resources can add substantial amounts to
3410-684: The sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest, and cultural value. On Earth , it includes sunlight , atmosphere , water , land , all minerals along with all vegetation , and wildlife . Natural resources are part of humanity's natural heritage or protected in nature reserves . Particular areas (such as the rainforest in Fatu-Hiva ) often feature biodiversity and geodiversity in their ecosystems. Natural resources may be classified in different ways. Natural resources are materials and components (something that can be used) found within
3472-586: The start the school enjoyed a close relationship with the corporate world. Within a few years of its founding many business leaders were its alumni and were hiring other alumni for starting positions in their firms. At its founding, the school accepted only male students. The Training Course in Personnel Administration , founded at Radcliffe College in 1937, was the beginning of business training for women at Harvard. HBS took over administration of that program from Radcliffe in 1954. In 1959, alumnae of
3534-633: The top 5% of their year class. HBS students can join more than 90 different clubs and student organizations on campus. The Student Association (SA) is the main interface between the MBA student body and the faculty/administration. In addition, the HBS student body is represented at the university level by the Harvard Graduate Council . In 2015, executive education contributed $ 168 million to HBS's total revenue of $ 707 million. This included: The school's faculty are divided into 10 academic units: Accounting and Management; Business, Government and
3596-443: The users according to the rules governing when and how the resource is used depending on local condition or the resources may be managed by a governmental organization or other central authority. A "...successful management of natural resources depends on freedom of speech, a dynamic and wide-ranging public debate through multiple independent media channels and an active civil society engaged in natural resource issues..." because of
3658-571: The utilisation of the resource compliance with the rules and impose penalties on those people who violate the rules. These conflicts are resolved quickly and efficiently by the local institution according to the seriousness and context of the offense. The global science-based platform to discuss natural resources management is the World Resources Forum , based in Switzerland. Harvard Business School Harvard Business School ( HBS )
3720-487: The world's prescription medicines have ingredients taken from plants, loss of the world's rainforests could result in a loss of finding more potential life-saving medicines. The depletion of natural resources is caused by 'direct drivers of change' such as mining , petroleum extraction , fishing , and forestry as well as 'indirect drivers of change' such as demography (e.g. population growth), economy, society, politics, and technology. The current practice of agriculture
3782-681: Was established in 1908. Initially established by the humanities faculty, it received independent status in 1910, and became a separate administrative unit in 1913. The first dean was historian Edwin Francis Gay (1867–1946). Yogev (2001) explains the original concept: The business school pioneered the development of the case method of teaching, drawing inspiration from this approach to legal education at Harvard. Cases are typically descriptions of real events in organizations. Students are positioned as managers and are presented with problems which they need to analyze and provide recommendations on. From
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#17328527725793844-469: Was ranked fifth in the nation by U.S. News & World Report , third in the world by the Financial Times , and second in the world by QS World University Rankings . Most full-time students study for an MBA, although doctoral programs are also undertaken. Executive education is provided, and online courses. Baker Scholars are those MBA students with academic honors over the two year course in
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