Understanding Competitive Advantage- Strategies, Examples, and the Role of Human Resources in Driving Success

Understanding Competitive Advantage- Strategies, Examples, and the Role of Human Resources in Driving Success

The modern business world is an arena of many businesses competing for the same market. Almost every sector is characterized by many buyers and sellers, whereby sellers must differentiate their business from that of others to gain a better share of the market. Businesses that succeed in such a setting are often required to create and maintain a competitive advantage over their competitors. Thus, it is worth understanding what a competitive advantage is and how it is created. In this regard, this provides a discussion that elaborates on competitive advantage. Further, a real-life example of a business with a competitive advantage is provided and evaluated based on the role of human resources in creating and maintaining the competitive advantage.

What Is Competitive Advantage?

Competitive advantage is the difference between one business and another that makes customers and other stakeholders choose one over the other. According to Bintara et al. (2023), competitive advantage allows businesses to gain greater market share compared to their counterparts in the market. Normally, competitive advantage arises from a product or service being more enjoyable, affordable, or better. Competitive advantage takes various forms and can be classified into three types. These include differentiation, focus, and cost leadership. Differentiation involves a scenario where a business establishes a point of difference between its operations, products, and services and that of competitors. Based on human resources, such competitive advantage can be obtained by having a unique workforce that is managed uniquely to deliver exceptional results. Other ways human resources contribute to a competitive advantage are illustrated in the image below.

Next, focus competitive advantage arises from a business paying focus to a specific market and commonly the minority sections of the market. Through the strategy, a business can pinpoint the specific needs of the customers who become reliable in consuming the business’s products. Lastly, the competitive advantage can be attained through cost leadership. Essentially, this entails streamlining operations to reduce costs to the lowest level. Notably, this allows a business to offer cheaper prices, and thus, a competitive advantage is attained through affordable products. When this is considered from an HR perspective, a company can obtain a competitive advantage by hiring less costly individuals, which in turn reduces payroll costs.

Example

Apple Inc. is one example of a business that has managed to drive competitive advantage using its human resources. According to Tien et al. (2020), the company runs a human resource management strategy that aligns perfectly with its overall business strategy. The company excels in recruiting and retaining the most qualified talent from the market. Despite hiring the best, the company ensures that the cost of the talents hired falls within the set budget plans as a measure to ensure it remains focused on cost leadership. Upon hiring the talents, the company invests in training them extensively by exposing them to workshops and webinars that equip them with excellent skills that are required in the market. Essentially, through its human resource strategy, the company allows its employees to become competitive as compared to those from other businesses in the computer technology sector. As a result, a competitive advantage is attained.

When the company is evaluated using a focused approach spectrum, its focused approach is identified in its human resource management strategy. Notably, this is so because the company presents its human resources with activities that allow it to understand the business’s brand culture and promote it effectively in its operations. Such activities include better accomplishments and capabilities and team-building exercises. According to Kryscynski et al. (2021), the activities leave employees with sufficient motivation to drive the competitive nature of the company in the market. Further, the company rewards its employees with promotional chances and competitive salaries to avoid poaching from other market participants. Remarkably, this is identified in the company’s low turnover rate for employees. It also depicts a cost leadership competitive advantage because, with a low employee turnover rate, the company will incur low costs related to hiring and training new employees.

The differentiation strategy at Apple Inc. also takes into account human resource management. The company always encourages its human resources to remain proactive in addressing the ever-changing consumer demands. Employees are encouraged to become imaginative and innovative by embracing a problem-solving criterion for all consumer needs. Essentially, this points to an enabling employee culture that allows workers to use their knowledge and contribute to the company’s existing competitive advantage. According to Ali and Anwar (2021), this is the reason behind the company’s long-lasting success in the market and continued competitive advantage in the development of personal computers and consumer electronics. Through the human resource strategy, the company has managed to hire a workforce from diverse backgrounds, which accents them credibility in every market. As a result, Apple Inc. has managed to penetrate all markets globally, boosting its competitive advantage and overall success.

Conclusion

Overall, human resources management has a role to play in driving the competitive advantage of any business. With the right strategy, a company can achieve all three types of competitive advantages, which include focus competitive advantage, cost leadership, and differentiation. Apple Inc. is a practical example of an organization where human resources contribute to the company’s competitive advantage in various ways. Thus, growing businesses seeking to achieve competitive advantage should pay significant attention to their human resource management by learning from business leaders who have managed to achieve the fete.

References

Ali, B. J., & Anwar, G. (2021). Business strategy: The influence of strategic competitiveness on competitive advantage. International Journal of Electrical, Electronics and Computers, 6(2).

Bintara, R., Yadiati, W., Zarkasyi, M. W., & Tanzil, N. D. (2023). Management of Green competitive advantage: A systematic literature review and research agenda. Economies, 11(2), 66.

Kryscynski, D., Coff, R., & Campbell, B. (2021). Charting a path between firm‐specific incentives and human capital‐based competitive advantage. Strategic Management Journal, 42(2), 386-412.

Tien, N. H., Thoi, B. V., & Chi, D. T. P. (2020). Comparative analysis of international marketing strategies of Apple and Oppo. International Journal of Research in Marketing Management and Sales. 1(2): 51-56

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Module 2 – Case
COMPETITIVE STRATEGY
Case Assignment
(Signature Assignment: Body of Knowledge, Emphasized Level)

In this assignment, discuss what is meant by competitive advantage. Refer to examples of ways organizations create competitive advantage.

Understanding Competitive Advantage- Strategies, Examples, and the Role of Human Resources in Driving Success

Identify a specific real-life organization’s competitive advantage and determine what role HR plays in that process.