Competitive Advantage: Creating and Sustaining Superior Performance

In 1985, Michael ostiary published Competitive Advantage Creating and Sustaining greatest Performance. In this book, he described how giving medications can buoy achieve war give c ar service in their industries. Porters focus in this book was non on an boilers suit war-ridden scheme, but on what organizations needed to do on a daily basis to achieve results. As Porter (3) stated, My aim is to work a bridge amidst strategy and implementation. To create the link between the overall strategy of a firm and how that strategy could be achieved, Porter referred to time valuate.As Porter (3) stated, emulous advantage grows fundamentally out of jimmy a firm is able to create for its buyers that exceeds the firms cost of creating it. This focus on value led to the concept of the value cooking stove, which refers to the internal unconscious processes that occur as the organization creates its product or service. Value chain solicitude is non just a process that occurs i ndoors an organization. Instead, it is closely linked to the competitive environs. This means that value chain steering takes into account the diligence in which the organization operates.This is referred to as the industry value chain and describes how the industry overall increases value to the consumer. This is an important point because it means that value chain management does not just refer to the series of processes that occur within the organization. As an example, consider the case of Apples Ipod. If creating value was only considered in the context of what happens within the organization, the focus exp peerlessnt be purely on the manufacturing process.Apple might consider their value chain as a process where peeled materials are converted to the product and where the product is distributed to the consumer. In terms of alter the value of their product, they might consider that saving on raw materials, diminish production time, and improving distribution give help amount value. The enigma with this approach is that it does not identify the current value that consumers contact from the product. This real value is place when the MP3 player industry is considered on a broader level.This broader construe shows that value is added more by marketing than by manufacturing. Apples value chain includes the major activities that instill value in the product. Marketing with the aim of gaining consumer gestate is one of the unwrap ways to add value. It is this aspect that Apple competes against with the separate organizations in the market. This illustrates that value chain management is a process of recognizing what activities add value to the organization and then focusing on these activities to gain competitive advantage.The aim is not to remedy everything about the organization, but to purify the processes that will allow the organization to gain an advantage on the competition. Porter (39) as well as identified various generic wine facto rs that are part of an organizations value chain. These generic factors are inbound logistics, trading operations, outbound logistics, marketing and sales, and service. Porter considered that these five areas add value to a firm. Porter (40) besides identified several aliment factors. These support factors are infrastructure of the organization, human resource management, technology, and procurement.Porter identified these generic factors as a general guideline for organizations, while noting that the industrys competitive factors visit what factors will comprise the value chain for a special(prenominal) firm. For example, in the case of Apples Ipod, sales and marketing would be a cardinal factor and technology would also be a part of the value chain. In the case of an organization manufacturing and selling nails, sales and marketing is not likely to be a large part of the value chain. Instead, operations may be more important, with the aim being to manufacture the nails as co st effectively as possible so as to maximise profits.For any organization, value chain management is used to identify the key factors that add value in the industry and then to determine how to improve those key factors so as to become more competitive. Southwest respiratory tracts is one organization that has successfully used value chain management to improve its performance. Southwest Airlines is recognized as a success in the airline business industry not just because it is a successful company, but also because it made positive changes to the industry. It is generally considered as a pioneer.This success is linked, at least partially, to its use of value chain management. Pellet (53) describes Southwest Airlines as a company that found fictive ways to make improvements, with these improvements oddly related to reducing the downtime of aircraft, improving scheduling, and making maintenance more efficient. At the same time, Southwest Airlines needed to improve cost-effective ness so it could offer a lower price to its customers, but still maximize profits. Southwest Airlines establish its success on identifying the industry value chain.This included noting the key industry factors that determine success. With the key industry factors identified, Southwest Airlines was able to find creative ways of improving on these factors. One of the important points is that Southwest Airlines strategy did not just involve copying what other airlines were doing. This was achieved because they were not compare themselves to what others were doing. Instead, they were only focused on how they could improve. This allowed them to identify unique ways of doing things and this is how they managed to gain competitive advantage.Southwest Airlines successes were enough to get them listed in Fortune magazines conduct 100 Companies list. In the magazine, it is noted that Southwest Airline won the dual Crown award for Best Airline five times a fact that shows their success is m ore than just financial (Moskowitz and Levering 148). Southwest Airline became the best in the industry. Their success shows how effective value chain management leads to competitive advantage. Finally, it is useful to consider how value chain management has changed since it was for the first time introduced by Porter in 1985.One of the major changes is that computer software package has become an important tool in the process. Computer software has been genuine to identify problems and opportunities for improvement in the value chain. This is largely focused on the manufacturing process, but can also be applied to any process where efficiency is desired. Another significant trend is that the value chain is blanket(a) further, both upline and downline. For example, many organizations are considering the internal processes of their suppliers.The idea is that if the supplier improves their value chain, the organization that receives the output of the supplier also benefits. In add ition, if the supplier can improve efficiency and reduce costs, the benefits can be passed on to the organization by lowering the price of raw materials. The same applies to considering upline organizations, such as distributors and retailers. This is creating an environment where organizations are demanding more from companies that provide them with any type of service. In turn, many companies are becoming less like suppliers and more like partners.This allows the organization to assist supplier companies, while also ensuring that they benefit from the improvements that suppliers make. This creates an environment where organizations are linked together by either formal or informal federations. In some cases, both organizations work together to determine how they can best assist each other. In other cases, organizations train contractual demands on their suppliers. In other cases, a formal partnership is in place. In all of these cases, the same trend is seen, with organizations r ecognizing that other companies are part of their value chain.