Development of the Competitive Spirit
In today‘s fast-paced economy competition is an issue of services and products. Much attention has been directed to a better service and the best product and how this can be achieved through utilizing the human resources. This research paper identifies the competitive advantage concepts and models, competitive strategies and the main human resource practices that have a significant impact on the employee‘s performance. Understanding sources of competitive advantage has become a major area of research in the field of strategic management. Finally a summary of practical criteria of best practice for competitive advantage is presented and a general discussion and recommendations have been drawn.
firm is implementing a value creating strategy not simultaneously being
implemented by any current or potential competitors, then we can say the firm
has a Competitive advantage. And when a firm is implementing a value creating
strategy not simultaneously being implemented by any current or potential
competitors and when these other firms are unable to duplicate the benefits of
this strategy, then we can say the firm has a sustained competitive advantage (Barney
1991). There are two major models that have to be considered. The first one is
the position or environmental model and the second one is the resource-based
Position or Environmental Model.
to achieve a competitive advantage, the firm is required to make a choice about
the type of competitive advantage it seeks to attain and the scope within which
it will attain it. Choosing the competitive scope or the range of the firm‘s
activities can play a powerful role in determining competitive advantage
because it aims to establish a profitable and sustainable position against the
forces that determine your industry competition.
1985 defines the competitive strategy as the positioning of a company in its
competitive environment. Also Porter has posed two important questions:
1. What is
the structure or the attractiveness of the industry which the company is in?
2. What is
the company‘s position in its competitive environment?
the first question a company, as an organization, should analyze their industry
by focusing on the following points (industrial analysis):
Begin with understanding your industry.
Focus attention on significant force.
Watch out for industry change.
the second question (competitive position), the following question should be
How does a company achieve superior performance?
To be a
superior performer in the engineering industry or any industry, the company
must have a sustainable competitive advantage which its rival cannot copy or duplicate.
competitive advantage can be sustained in one of the two ways (Porter 1985):-
the company can be lucky enough to come up with something that its rivals
cannot copy which is very rare, or
company is improving so fast that its rivals can not catch up.
shows that there are five competitive forces which play a major role in the
company success or failure
1. The entry
of new competitors,
threat of substitutes,
bargaining power of suppliers,
bargaining power of buyers, and
collective strength of these five competitive forces determines the ability of
firms in an industry to earn on average, a rate of return on investment in
excess of the cost of the capital.
also notes that a business can develop a sustainable competitive advantage by
following two strategies; cost leadership strategy or differentiation strategy.
Leadership Strategy: the primary focus of a cost leadership strategy is to
achieve low costs relative to competitors. Lowering costs lead to lowering
prices, which can increase demand for products or services, but if the product
or services cannot be produced at a lower cost it also reduces profit margins.
To compete based on cost, managers must address labour, materials, overheads,
and other costs, and to design a system that lowers the cost per unit of the
product or service. Often, lowering costs requires additional investment in
automated facilities, equipment and employees skill.
Strategy: the primary focus of a differentiation strategy is
uniqueness such that the organization‘s goods and services are clearly
from those of its competitors. In other words the focus is on creativity and
innovation which have long been recognized as necessary for bringing the
obtain the competitive advantage
and Jackson 1987 have emerged from Porter discussion of competitive advantage
three competitive advantage strategies that organizations can use to gain
strategy: the primary focus here is developing products or services different
from those of competitors or offering something new and different. A vital
component of any innovation strategy is getting employees to broaden their
enhancement strategy: the primary focus here is enhancing the product and/or
services. Quality enhancement often means changing the processes of production
in ways that require workers to be more involved and more flexible.
reduction strategy: firms typically attempt to gain competitive advantage by
being the lowest cost producer.
question is who brings the innovation, quality and the cost reduction strategy
to the firm? It comes from the right employee who is motivated by the right
human resources practices. In the next sections we will deal with the issues of
how the right employee is employed and motivated.
Advantage through Job Analysis, Job Description and Job Evaluation
analysis looks at the behavioral needs of a particular competitive strategy
(cost leadership or differentiation) role peculiar to the culture and
organization of the company. It is like performing a Personal Profile Analysis
on an imaginary person. The goal is to define the ideal individual for the job
position from the perspective of the company and the employees that the
successful applicant will work with. Job analysis is the process of collecting
information and making judgments about a specific job. From the stand point of
researchers, that competitive advantage only occur when employee‘s knowledge,
skills and ability can add value to the firm, are rare, cannot be imitated and
are not sustainable. In order to target employees with the requisite knowledge,
skills and ability, the job has to be carefully defined. The HRM literature
promotes careful job definition in the belief that it will have two effects.
First, it is commonly believed to assist targeting and attraction of potential
recruits. Second, job analysis helps potential recruits to make up their own
minds about whether to apply or not.
description is generally used to identify the responsibilities, the objectives
associated with each specific task and the reward that associated with good
performance. In order to accomplish the employment relationship effectively,
work has to be designed, programmed, costed, organized and co-coordinated. In
other words detailed job description, otherwise can be used by an employee to define
what s/he is not prepared to (―that‘s not part of my job‖ or I‘m not paid to do
that‖). In a dynamic environment it is impossible to have a good job
description because anticipating the environment changes in advance is
impossible. But that does not mean we should not describe the job as detailed
have been analyzed and described, the job evaluation began by considering
several job factors such as: working conditions, necessary technical KSA
(Knowledge, Skills and Ability) and behavior, salaries and required managerial
skills. A rating of each factor is made on a standard scale, and the total
rating points can be used to rank jobs hierarchically. The recruiting and
selection model appendix A can be used in the rating process by using different
criteria and weights such as the above-mentioned job factors.