Can a firm create a unique competitive advantage? Discuss.

Innovations in shipping, reductions in tariff rates, and the creation of ISO
certification standards for quality management all have contributed to
outsourcing and the creation of global supply chains. Why?
Innovations in shipping, reductions in tariff rates, and the creation of ISO certification
standards for quality management open up domestic markets to global markets. For
example, innovation in shipping allows countries to provide agile response to
customer demands and it also promotes competitiveness. In addition, improved
technology means that consignments are not held up in shipping docks for long
periods as before, making efficient logistics an enabler for companies in the global
market.
Tariffs are among the primary barriers to trade, and lowering them encourages trade,
and consequently, contributes to effective flow of goods and raw materials across
borders. Lower tariffs also means that companies can take advantage of key
competitive advantages from country-specific resources. For example, Apple
outsources assembly of the iPhone to China due to the large skilled labor force and
production of chips and specialized components to Kora because there is high
innovative power. Therefore, this provision has facilitated global supply chains where
different markets benefit.
Moreover, ISO certification standards for quality management has contributed to the
growth of the global supply chain and outsourcing since organizations use these as a
guideline to show the ability to offer consistent services and products that meet
regulatory and customer requirements. Companies can also take advantage of ISO
Certification to make decisions for outsourcing since there is already set standards on
production, the equipment or tools uses, and measures taken to ensure safety,
consistency, and quality. Moreover, standards also establish provisions for how
companies can integrate different ISO standards, which helps create a simplified
framework for quality assurance.

4. Can a firm create a unique competitive advantage? Discuss.
   Without a doubt, a firm can create a unique competitive advantage. Today’s market is
   highly competitive and thus businesses must strive to gain an advantage over other

firms in the competition. Creating a unique competitive advantage is daunting but
attainable for firms that want to remain profitable in the long-term. In this case, a firm
must have must first establish fundamental strengths such as robust leadership,
incentives, organizational culture, organizational design, and organizational systems.
In addition, a firm must establish its competitive strategy, which is based on
attractiveness of the market for long-term profitability and assessing the factors of
relative competitive position within the industry. Factors that determine industry
profitability, commonly referred to as the Porter’s Five Forces, include:
 Threat of new entrants
 Bargaining power of buyers
 Threat of substitute products or services, and
 Bargaining power of suppliers.
These forces determine industry profitability because they influence the costs, prices,
and required investment. A unique competitive advantage is also dependent on the
sustainability of the strategy, in which case a firm must ensure that the firm’s internal
determinants are aligned with the strategy. Some of these determinants include:
 Establishing a unique value proposition to create a competitive advantage.
 Rewarding behaviors that support and advance corporate vision, mission, and
values.
 Understanding and targeting the right customer to maximize customer loyalty.
 Defining a specific niche that is often under-serviced, or presenting a gap of
unmet needs.
While these factors are core determinants, a firm must streamline other determinants
of profitability within its business model to come up with the best competitive
strategy.

5. For any firm to succeed, it has to produce more than a single product. Do you
   agree? Discuss.    
   I agree that for any firm to succeed, it has to produce more than a single product. This
   strategy is known as product diversification and helps companies increase
   profitability. Many studies have explored the relationship between company
   performance and diversification, and elucidated that firms that have product
   diversification have more strengths and advantage over firms concentrating on single
   products. For diversification strategy, a firm might decide to add similar products or

services to the already running business, venturing into new and unrelated products or
services, and adding new products or services that lack significant commercial or
technological similarities. Although there are successful focused strategy firms in the
market, firms that decide to explore other products for their portfolio have a wider
potential for success, as well as a wider risk-pool.
Diversification presents the following benefits to firms:
 Firms can reach wider strategic assets such as new market segments and
unfulfilled market demands.
 Firms can mitigate risk in case of industry failure.
 It helps firms adapt to new technology and increase creativity through
innovation.
 It leads to diversification of skills, which strengthens a firm’s asset/resources.
However, diversification is challenging and can present several constraints that would
affect profitability. Some of these challenges include:
 Poor management on different levels of operations
 Regulatory challenges in both domestic and global markets since all industries
have varied standards of quality, production, and dissemination.
 Cultural differences when firms expand to other countries might also be
challenging to companies that have product diversification.
Diversification might also lead to problems with maintaining consistency in value for
customers. Therefore, to sufficiently measure the chance of successful diversification
or the risk involved, a company ensure that:
 The market or industry chosen is attractive.
 The cost of entry does not jeopardize future profits
 There is presence of synergy, whereby the new product or service must gain
from the firm, or that the firm can gain a competitive advantage with the new
strategy.