Competitive Advantage – 5 Factors (2024)

For any enterprising firm, the competitive advantage may stem from any of the host of functions it performs. In other words, each of these functions are the sources of generating this much desired and valued competitive advantage and edge over others in the industry.

Though it is possible to identify functional areas for competitive advantage, at least five broad functional categories can be identified. It would be nice to call them as factors of competitive advantage.

To name them:

(A) Marketing factors,

(B) Production factors,

(C) Research and development and engineering factors,

(D) Personnel and expertise factors and

(E) Corporate resources and finance factors. Let us know the possible competitive advantage factors from the specific angle of these functional categories.

A. Marketing factors:

Marketing is a major corporate function. It is marketing that gives life to the very enterprise for it has no right to survive unless it produces those goods and services, which are needed by the market place.

Competitive advantage can be built over wide range of the marketing functional areas:

1. The corporate product-mix:

The fundamental task of marketing is to deliver the package of offer to the consumer to fulfil his needs, in terms of his expected terms, attributes and benefits and make out organisational goals including profit maximisation.

The total offer made warrants choice of right product, making it available at a place he wants, promoting the product for better understanding through communication component, and at a price that is reasonable from the angle of consumer and agreeable from his point of view.

All these four Ps – the components of a market-mix help in mining the consumers. Here we are concerned with the product mix. Product mix as one of the elements has again components.

In-fact, product is the focus of marketing and marketing efforts. It is the sum total of physical and psychological satisfaction that it provides to the buyer or the user.

It is the sum total of parts like material used in its construction and its ability to perform, its packaging, its brands and the other intangibles associated with it all that speak about it image or personality.

The most significant product variables are – product line and product range – product design the product package, product quality, product labelling, product branding after sale services and guarantees and warrantees.

The mix chosen to meet a target consumer group has the ability to give an edge over the competitors. Intelligence lies in its proper match.

2. Packaging:

In-fact, product packaging is one of the variables of product-mix. However, its importance makes its treatment independent or extra-ordinary. What clothes are to the human- beings so are the packages for the products. Packages are the container or a wrapper used to house the product. Packaging is the general group of activities in designing the containers or the wrappers for the products.

A good package plays a constructive role as it protects ‘the products, provides convenience to consumers, increases economy and communicates; it keeps contents clean convenience to consumers and dealers storage and warehouse people display value for merchandising. Attractive packages are having meaningful communication value.

In a self service store, it helps the consumers to identify the product, builds consumer confidence, describes merits and limits of products and encourages impulse buying. Good package designs has a driven of size, colour, shape, material, construction, closure, copy, illustration in terms of creative graphics.

3. Service norms:

With every increase in the use of machinery, appliances, equipments and gadgets, there is inherent need for after-sale services such as installation, guarantees and warrantees against the manufacturing defects, servicing, repairs, spare-parts, maintenance and the like.

Manufacturers of industrial products and white goods have to establish a clean, clear and second service policy and a plan for servicing their products after sale.

It is such a tool that keeps the consumers, increases consumers and builds image of the firm on which it can en-cash. Today, good many dealers in computer hard and software’s do not care for after-sale service; for them selling a computer is all which means that the relations come to an end bringing a grinding halt because you can not fool the people all the time. Therefore, it is the service norms set and practised by manufacturers or dealers that counts.

4. Pricing:

Price is a major marketing tool and helps in directing the product to a specific consumer segment. It is the powerful instrument in which both the buyers and sellers are interested directly and the dealers indirectly for their individual and mutual gains.

It is the price of a product or a service that ensures a decent return on investment, guarantees stable structure, creates, maintains and extends market and market-share.

Price is equal to consumer expectations such as product, its installation, credit, after- sale services and the like. The price variables are pricing policies and strategies, the terms of credit, in terms of delivery, amount of margin, resale price maintenance and so on. As a big gun it can make or mar the competitive strength over others.

5. Market share:

Market share is really a very meaningful measure of success of a firm’s marketing strategy. A market share that company wants to enjoy depends on good many factors namely, nature of product, price, quality, packaging, after sale service package, guarantees and warrantees.

Of these entire market share price objective can be either to maintain the market share, to increase it or, sometimes, to decrease it. The company uses the price as an input to enjoy a target market share. Target market share means that position of the industry sale which a company aspires to attain.

This market share is generally expressed as a percentage of total industry sales. Price flexibility and, very often the profits are linked to the firm’s market share position. Let us take an example of audio-visual market in India with market shares.

Taking Audios – like transistor, sound gadgets such as two in ones, sound systems, walkmans – Colour Television sets and Black and White Television sets, the market share has been as under in 1995.

From the above table, it is quite evident that taking all products together Philips has the highest share followed by BPL, VIDEOCON and ONIDA rest by others. However in each field their shares are quite clear. Taking audios – PHILIPS comes first BPL second.

VIDEOCON third, ONIDA fourth and others; coming to Colour Television sets, BPL has highest share followed ONIDA, VIDEOCON and PHILIPS and others. Turning to Black and White Television sets, the ranking is PHILIPS and ONIDA share first place, followed by VIDEOCON and BPL and others.

6. Marketing organisation:

Any organisation is the vehicle created or structured to achieve certain goals and objectives may be business or non­-business. It is group of persons working together towards the attainment of certain common goals.

It is one that provides network of working relationships among the different functions to be performed and a means of co-ordination among the people who perform the functions.

In this context, the structure of marketing organisation has a direct relationship to the marketing objectives to be attained and the marketing tasks to be performed.

As wide variety of marketing tasks are to be performed, the tasks have to be grouped logically and allocated to different viable administrative blocks which one calls them as departments. The markets committed in structuring a marketing organisation will cost in terms of inefficiency, high cost and failure of the unit.

Care should be taken to avoid the common pit-falls such as haphazard grouping of activities-unclear responsibilities-ambiguous and misleading designation-dual control-unjustifiable allocation of functions – improper delegation-over formalization and so on.

It should be subservient to market needs and the development of core- competencies. It should be highly adaptive, responsive and innovative.

7. Marketing research and marketing intelligence:

Marketing research is not something which is already searched. It stands for the methods of finding and analysing facts to assist managers in making rational marketing decisions. It is the systematic, objective and exhaustive search for and study of facts of relevance to any problem in the field of marketing.

Thus, it is a systematic study, scientific study and a managerial tool. It helps in knowing buyers, measuring impact of promotional efforts, knowing consumer response, knowing market costs and profits, in mastering external forces, in designing and implementing marketing control.

Marketing research is based on marketing information intelligence. Information consists of evaluated data; data based symbols, usually numbers, used to represent the things.

It stands for the cues, or the guidelines which have the potential of influencing decisions; it is any perceived or recorded fact, opinion or thought. In the field of marketing, the nature of information needed to manage the marketing functions of an enterprise is unique because of its dynamism and diversity.

The need for marketing intelligence arises basically because of knowing consumer demand, increasing complexity of marketing, changing economic parameters, changing competitive conditions, strides in science and technology, fast grooming consumerism and the like. It keeps the marketing organisation updated.

8. Brand dominance:

Any successful organisation’s biggest assets are brands because they provide customers a way of recognising and specifying a particular product in case they want to choose it again or recommend it to others.

A good brand helps marketers to develop specific images and inter-related marketing strategies for a particular product or group of products. It helps in commanding a premium price in the market and it is the only element of a product that competitors cannot copy.

The overall strength of a brand in the market place and its value to the company that own it is known as brand equity. Of late, the companies are trying to assign financial value to brand equity.

Brand dominance is the ability of a company to develop brand loyalty. Brand loyalty stands for the level of commitment that customers feel toward a given brand, as represented by their continuing purchase of that brand.

According to experts, when there is a tight race for brand loyalty, three elements help in assuring the victory namely:

1. Swift management response both to the press as well as to the market-place

2. The ability to create a perception of quality and

3. Maximised spending on marketing.

9. Marketing communications:

One of the four Ps of marketing-mix is “promotion” which speaks of communication mix. Which deals with the personal and impersonal or direct and indirect persuasive communication about the product or service of any manufacturer? Though companies communicate with the present and potential customers in a wide variety of ways, the most distinguishable categories are two namely personal and impersonal.

Personal communications relate to face and face meeting between the sales-force of the company and the class of customers. On the other hand, impersonal communications comprise of advertising, sales- promotion and public relations.

In a competitive market where several companies are striving and sweating to win over the consumers, mere presence of a quality is not enough; what is important is, it is to be made known to the people.

Marketing communication, as a phrase, is an attempt to present a set of messages to a target market through multiple cues and media with the intent of creating favourable responses from the market towards firm’s total product offering, at the same time providing for the market feed-back for improving and modifying firm’s total product offering.

Thus, each firm is a sender of marketing messages and also a receiver of market responses. As a sender of messages, the firm communicates with the market not only through promotional stimuli but also through product price place and promotion.

As a receiver of market responses, the firm collects information through marketing research and marketing information system. Product acts as a good carrier of certain messages.

It conveys through its size, colour, shape, material components, its package, labels and the brand name. Price as a communicator it speaks of price as something more i.e., real value of money, it gives quality equation, status equation, technological superiority, price reasonability from the angle of a consumer “place” as a communicator, talks of the store image, store, level merchandising.

POP appeal and store choice “promotion” as a communicative process has three prongs namely personal selling, advertising sales-promotion and publicity of late even public relations as noted earlier “Personal Selling” is the oral presentation in a conversation with one or more prospective purchasers for selling; it consists of winning the buyer’s confidence for the seller’s house and goods thereby winning the regular and permanent customer.

Its strengths are flexibility and adaptability minimum waste – agent of feed-back – lasting impression pulling through logical sequence. The limits are: it is expensive difficulty of getting right kind of sales force stake in the customer loyalty more administrative problems.

“Advertising” as a macro concept stands for the entire ad industry a social and business institution; as a micro concept it represents a managerial function sending messages to the target groups of audiences.

Its strength lies in helping manufacturers by increasing and stabilizing sales maintaining existing markets and exploring new ones controlling prices; middlemen by guaranteeing quick sales acting as a salesman, sustaining resale price maintenance; the sales force by creating a beautiful stage effect reducing job burden instilling self-confidence; the consumers by helping decision making ensuring better quality products at reasonable prices saving good deal of time; the society by uplifting the living standards generating gainful employment opportunities providing new horizons of knowledge upholding the national culture.

The limitations are:

It has limited capacity, Rigidity of advertisem*nts, Un-believability, Advertise ability. “Sales- promotion” is a direct and indirect inducement that adds extra value to the product, thus, prompting and propelling dealers, distributors and consumer to buy the product.

Sales- promotion involves marketing activities, other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness.

The strength of sales- promotion lies in: By helping the manufacturers through creation of new customer retaining them combating competition waving middlemen; by helping middlemen via multiplying sales reducing the strain building store image bringing like in earning; by assisting the consumers by supplying information improving the standard of living granting incentives building loyalty giving better value for money.

The limitations are: it is a short-run device department tool it damages brand image undervalued by experts. “Public Relations” are the relations of an organisation with the general public with publicity.

It is a deliberate, planned and sustained effort to establish and maintain mutual understanding between an organisation and its public.

Its strengths are image building- clearing misunderstandings – expressing great and deep concern for the general public. Any efforts, amount and talents put in will not be a waste but a good investment.

10. Channel strength:

In today’s marketing systems, not all manufacturers and producers sell their production to the final users or industrial users. That is, goods do not flow directly from producers to the consumers. Normally, they use a number of marketing intermediaries for taking their products to the users.

These intermediaries are known by variety of names such as selling agents, marketers, wholesalers, distributors, stockiest, franchised dealers, retailers, representatives, brokers, commission agents or even jobbers.

A marketing channel is a pipe- line that moves the products from producers to the consumers. A channel plays a constructive role in the marketing of a product.

A channel provides distributional efficiency to manufacturers, product assortments, salesmanship, merchandising, implementation of price mechanism, takes care of physical distribution; it acts as agent of change and generates demand.

The success of a marketing organisation depends on this effectively, adaptively and innovatively designed used channel or channels of distribution.

11. New product leadership:

It is rightly said that early birds get the worms. Similarly, another statement is of much relevance here that pearls are available on sea-bed or in deep-water. A company which is adaptive rather than passive to changes in demand will do anything to make available some new products which have edge over that of competitors.

A new product needs not be entirely new – but new in terms of the size, shape, weight, colour, taste, and price, functional utility, symbolic, synergic and more matching to changing expectations of society.

It is a modification or refinement that has its role. The product that appeals to the consumer perceptions has a competitive advantage.

B. Production factors:

It is the set of marketing factors that dictate production factors for a company cannot produce what it cannot sell lucratively. The field of production has, therefore certain areas where the firm can have core competency and, therefore, competitive advantage. By nature, production implies conversion of inputs into value added output as per consumer specifications.

The production factors that can be a source of competitive advantage are:

1. Economies of scale:

Scale of business stands for the size. Whether it pays to carry on business on mass-scale or small- scale. Much depends on the circ*mstances arising out of nature of product, technology, managerial philosophy, and managerial ability among other things.

One thing is sure that when the business is carried on mass-scale, there will be definite economies or benefits in the fields of production, managements finance and marketing which we call as internal economies. In addition, we do enjoy external economies arising out of concentration, information and disintegration.

External Economies are those which are enjoyed by all the firms and arise from location of industries and are at the disposal of all the units in the same industry. As stated earlier, three types of external economies one can think of namely “of concentration”, “of information” and “of disintegration”.

Concentration of industrial units at a point make available cheap labour both – skilled and unskilled, transportation, warehousing; banking and communication facilities, secondly, the firms get information from outside agencies regarding trade, research, environmental and technological developments. Thirdly, there are certain economies arising out of disintegration such as coming together of subsidiary and service units might bring in certain economies with them. Coming to Internal Economies, these are enjoyed specifically by individual units because of their unique position in each branch of activity.

In production field these can be cost reduction, bulk buying, division of labour, use of machines and electronics, use of by- products, research and development, optimum use of installed capacity, acquiring patent rights; the economics in management can be – employment of experts, reduction of over heads, use of modern techniques and appliances, economy in organisation; in the field of finance, these can be low rate interest finance, reinvestment of profits, withstanding of rigors of adversity, spread of risks, proper maintenance, reduction in bad-debts and better working capital management; in the field of marketing these can be – lower sales price, lower selling costs, prompt service, effective advertising, better sales agencies and enjoyment of monopoly position.

2. Locational advantages:

Ultimately, the objective of any industrial location is to make it able to deliver the products to the customers at a cost equal to or less than that of the competitors within the product field. The cost of good delivered to the customer depends upon three major factors namely, the cost of procuring material, the cost of fabrication of material and the cost of distributing the end product to the final user.

The locational advantages stem from the facts of:

(a) The minimum cost of transporting materials and products.

(b) Easy availability of raw-materials and other factors of production,

(c) Convenience in accessibility to markets,

(d) Availability of adequate space for the site of the enterprise,

(e) Enough scope for further expansion,

(f) The possibility of the unit started to pick-up momentum of an early start and

(g) Integration of the enterprise with economic, social and cultural traits of the community of the regions.

3. Raw-materials:

Good many companies have competitive advantages over other because of the basic input namely material. Competitive edge is dependent on the raw-materials cost, equality and adequacy, in addition to regular supply.

That way getting raw-material is not a problem. However some companies are bestowed with natural gift of abundant supply raw- materials of very high quality at pretty lower cost.

Thus, De Roger Limited of South Africa is the supplier of world’s 90 percent of rough diamonds. It is but natural that the quality and cost of final product is dependent on these input characteristics. It should be noted that the yield of input is of greatest significance.

4. The strength of maintenance:

Production machines and equipment wear out all the time. Greater the number of parts in the machine, greater will be the possibility of wear, tear and therefore, breakdowns. When machine breaks down then there is urgent need for repairs to put it back to normal working.

The costs of machine break down are:

(a) Down time of machines resulting in loss of production and sales.

(b) Idle time of labour force – both direct and indirect.

(c) Increase in scrap and rejection.

(d) Dissatisfaction and loss of loyalty of customers caused by delay in delivery commitments, and

(e) The actual cost of repairs.

Therefore, preventive maintenance policy and system should replace the fire-fighting system of corrective maintenance. Thus, prevention is better than cure which acts a great source of competitive advantage

5. Production and post-production facilities:

It goes without saying that high rate of productivity is the hall-mark of excellence achieved by making best use of the available or cultivable facilities, faculties, talents and skills of the man-power within an organisation.

Whether it relates to the selection of suitable sites, assets or inputs or their proper utilisation, it basically calls for the perfect employment of capabilities and calibre.

The production and post-production facilities should be such that they take shorter time, least expenditure without compromise on quality or workmanship, with a minimum of waste of inputs, and reclaiming or recycling wastes of all physical resources in most cost effective manner.

It is the availability and use of production and post-production facilities that decides the rise in the rates of output and inputs where the latter should be much lower. The production team must use profusely the relevant techniques of methods study, work- measurement study, man-power planning and development, quality control techniques, and various forms of operations research.

6. Inventory norms:

Materials account for 35 percent to 55 percent of production costs. Estimates and experiences have proved beyond doubt thus as much as ONE THIRD of company’s TOTAL INVESTMENT is in the form of stocks of raw-materials, work in progress and finished stock.

Of these three the largest share is that of raw-materials a big source of cost control and reduction. Therefore, norms are to be set for inventories to be held at any moment of time. The question is what shall be minimum and maximum quantity of stock to be held, how much should be bought at a time?

How to treat the items for monitoring purpose?

Should the company be happy with annual stock taking or be it replaced by perpetual inventory system?

Whether a material is moving faster or at slow pace?

There are good many techniques which have developed and used successfully such as level settling, economic order quantity, A.B.C. analysis, material turnover ratio, concurrent stock taking through updated daily recording of transactions. All this reduce material wastages, investment and hence costs.

C. Research and development and engineering factors:

One cannot under-estimate the role of research and development in these days of cut-throat competition. Research is the industry of discovery and development is the conversion of a dream into reality.

Research and development is a must these days by almost every adaptive firm though it costs in terms of time, treasure and talent. It is that areas which can mop up all others in the field and can create place on the map of performance.

The important aspects are basic or fundamental research capabilities, applied research and development capabilities, speed and advance of research and development process, development of new products and value engineering that can be considered as a part of it.

1. Basic or fundamental research capabilities:

Basic or fundamental research signifies original investigation for the advancement of scientific knowledge. It is one which does not have any specific commercial objective or objectives although undertaken by a particular company. It represents primary investigation for the stake of knowledge dealing basically with fundamental questions such as why blood is red? grass is green ? Sky is blue? It is aimed at the discovery or the explanation of the fundamental laws and phenomena of nature whether organic or inorganic.

Thus, it is concerned with the framing of generalizations leading to the formulation of theory. Governmental organisations have used this in improving national health, welfare and military strength; while business organisations aimed at discovering the relationships or the concepts that enable them to achieve technological edge over others. As an ongoing process, it is time – consuming, money making and brain-storming.

2. Applied research capabilities:

Applied research is one that is to find the solution for an immediate problem faced by the society. Applied research represents an investigation focused towards the discovery of new scientific knowledge which has definite commercial object or objectives to be achieved. It is one which is directed towards a business problem.

It is the creative process of applying basic science to inputs and outputs or any other industrial and trading needs. It is applied research that bolsters up the fundamental research. Countless examples of applied research can be given. Perhaps the best is that of nylon.

As a product, it was named as “nylon” because, the research team consisted of scientists or researchers from America and England and thus, the took two letters relating to America and three letters relating to Great Britain namely NY (NEW YORK) and LON (London) thus making it NYLON.

Today, it has become a basic input for manufacturing, man-made fibers, rope, stockings-, bristles of brushes of different types; what is true of this nylon, is true of plastic, new-metals, packaging materials and so on. It has brought about new products, processes, methods, improvisations.

3. Speed and advance of research and development:

Of late, the question is not one of going in for research or not but one of at what speed and of what level? It is so because, the competition has grown to such an extent that the success of research and development efforts are decided by its speed and level. Cost is not a factor, but it is pace and quality that matters.

Though research and development expenditure by Indian economy is less than half per cent of national income, there are companies which are capable of spending per day in the range of 15 to 30 lakhs of rupees. It is particularly so in pharmaceuticals, automobiles, computers. The reason is obvious that early bird gets the worm.

Today lazar colour printing of photos after developing costs just less than Rupee 0.50 and yet the firms can make profit though they charge Rupees 3.75 per copy of photo. What is true of this colour processing is equally true of xeroxing the material. Any company that comes out with a new, improved and effective product, process, and method has the edge over its late beginners.

4. Development of new products:

“Development” signifies congruous contribution towards the improvement in the existing knowledge through improved ideas, system, methods, techniques; it is a technical activity of translating the research findings either into general scientific knowledge or products and processes or both. Such a development can be technological, engineering, advanced or innovative. When one talks of new product, really it is difficult to say what is a new product. A new product is one which is new to the company introducing it, though it might have been made by others.

New products are those whose degree of change for customers is sufficient to require the design or redesign of marketing strategies. Very clearly, new products are those that create unique problems for management, especially in terms of technical development, testing and commercialisation.

In most industries, competition pressures warrant a constant flow of technologically new products or improvements in the existing ones if the corporate sales and profits are to be sustained and enhanced.

The corporate sound health depends on a continuous flow of new products and improvements in the existing ones. The very survival rather successful and growth depend on incessant development of an acceptable new and improved product.

5. Value engineering:

“Value analysis” or “value engineering” is a precise, disciplined, one-purpose thinking process. It is an arrangement of techniques which makes clear precisely the functions that the customer wants; establishes the appropriate cost for each function by comparison; and causes required knowledge, creativity, and initiative to be used to accomplish each function for the cost. Quite often analyses of this kind would reveal the imbalance that exists.

This helps in improving the design of the products or services and many unwanted features could be eliminated. Finally, the consumer will be given a product of better value.

Value engineering is an essential tool not only for cost reduction but also to improve the overall value of the product. It could turn out to be a very powerful intervention in a competitive situation. There are countless cases where cost reduction to the tune of 30 to 40 percent has been achieved by applying value engineering or value analysis.

The credit of devising the technique or set of techniques goes to Mr. Lorry. D. Miles of America who was working for General Motors in 1947 and later on became the president of SAVE (Society of American Value Engineers) Value engineering developed because of the inherent desire in human-being to make product cheaper and to sell cheaper, of course, keeping the utility of the products same.

It is worth emphasizing here, which “value” differs from both “price” and “cost” in the sense that it is the cost proportionate to the function. Therefore value is equal to the function or utility divided by cost.

Therefore, it can be said clearly that’ value of a product can be increased either by increasing its utility with the same cost or by decreasing its cost for the same function.

D. Personnel and expertise factors:

It is indeed foregone conclusion that with the advent of more competition the number of industries has multiplied. In actual practice, with the human resource being scarce, organisations are vying for same set of individuals and skills. As a result, the shifts of people and skills, across the organisations have reached new heights.

On the other end, each organisation is compelled to achieve more in terms of performance for both sheer survival and growth – both in the short and long term perspectives. Factors like technology finance and service will become common factors in all organisations. There will be just a marginal difference between one organisation and another.

Therefore, with a view to produce better results, organisations will have to depend to a greater extent on “human” or “manpower” aspect. It is this manpower difference between the organisations that brings in competitive edge. This value system of human side is going to be a crucial and decisive aspect of human-resource exercise.

The major components of this set of factors are: high calibre employees, motivational level, lower labour costs, industrial peace and training and development:

1. High-calibre employees:

No one can deny the economic supremacy of new economic powers namely Japan, Germany and economies of East Asia dominating the world economic scene today. Though these countries differ largely in culture, languages, share a few features in common such as natural resource deficiency, high density of population, except Germany, have risen to their present heights of economic affluence within a relatively shorter period particularly after Second World War and have faced acute crisis involving their very survival as a nation.

The wonderful work they have done is that these countries have focused on the development of human resources as a matter of national priority and insulated their economic processes from political pressures and therefore, they are featured by a relatively higher egalitarian distribution of incomes and lower levels of socio- economic inequalities.

Today, these fast growing economies represent essentially thought put economies. Human resources with very high levels of education and skills constitute their massive distinguishing asset.

These economies have largely succeeded in overcoming the intricate problems of poverty, illiteracy, hunger, unemployment, and inflation and population growth. Take the case of Japan and Germany, the two devastated countries during world war two, but have gained astonishingly new dizzy heights within two decades enjoying highest per capita income.

In this context we cannot forget South Korea and Taiwan. In 1960’s India and those countries were counted as “poor” having a per capita income of 80 US dollars; today in 1990’s, South Korea and Taiwan have per capita income of 6,000 and 8,000 US dollars leaving India far behind per capita income of 350 US dollars.

Why India failed? and Where? In-spite of the fact that Indians are more talented and industrious in the world. In-spite of many positive factors such as good and plenty of natural resources, fertile land, water, year-round sunshine, and variety of minerals.

It means India has failed miserably to develop, mobilize and deploy our human capital. It is the omega source of its productive excellence, technological strength, economic achievement and social success.

It also speaks of nation’s most basic resource in terms of their knowledge and learning, productivity and skills, creativity and innovation. Only through the collective energy, intelligence, skills and abilities and vision of Indian people, Indian economy can come out of rut of stagnation and forge ahead in global economy as a future global player.

2. Motivational level:

Employee motivation – that causes channelizes and sustains people’s behaviour has always been important for managers to understand. By definition, the managers work with and through people, but people are complex and some times, irrational in their behaviour. Their motives are not always easy to discern. Motivation is a persuasion for a cause towards a certain conviction or belief.

It means an act of persuading someone to accept an idea and make him or her act in a particular way. It is the apt act of pushing or pressing the right button to get desired result. The managers must channelise people’s motivation to achieve personal and organisational goals.

The theories of motivation are three dimensional namely, content, process and reinforcement. Content theories highlight the importance of drives or the needs within the individual as motives for the individual’s action.

Process theories stress “how” and “why” and “by what goals” the individuals are motivated. Reinforcement theories spotlight on how the consequences of an individual’s actions in the past affect his or her behaviour in the future.

In this task, a manager is to know more about employees because; a message that inspires one group might as well turn to be a flop with others. It is worth remembering here that opinions, attitudes, and beliefs which are built on over a longer period of time, are difficult to change.

To study the employee attitude or behaviour, it is therefore, necessary to keep in constant touch with them or to maintain regular programme of communication. A system of perceptive of motivation would be most useful.

This warrants taking into account the entire set or system of forces operating on the employees must be considered well before the employee motivation and behaviour is adequately understood.

Such a system has three variables namely the individual characteristics, job characteristics and the work characteristics. These can be used to make employees to work at full-steam so that they contribute their very best.

3. Lower costs of labour:

Labour cost is a second major chunk of total cost of making and serving a product. These days it is most difficult, if not impossible, to reduce the labour cost as labour is no more commodity and political support it enjoys.

If not cost reduction, at least labour cost control can be achieved. The labour costs can be broadly classified as developmental costs, maintenance cost and mismanagement costs. Development costs relate to employee recruitment, selection, training and placement.

The maintenance costs are those which are paid for the sweat of employees by the employees both monetary and non- monetary out of legal obligations and corporate policies and mismanagement costs are hidden costs in terms of labour turn-over, absenteeism, damage to machinery, more scrap, waste, defectives, industrial accidents and man hours lost due to abnormal idle time and so on.

However, labour costs can be both controlled and reduced indirectly by improving employee level of efficiency through motivation. Positive steps such as scientific and impartial selection, sound training, employee job security, job satisfaction, sound employer, employee relations are likely to like up employee morale, a sense of belongingness and employee loyalty, of all these sound remuneration system plays a constructive role. Again, employee empowerment, participation and commitments go a long-way to achieve this goal.

4. Industrial peace:

Industrial peace is the hall-mark of industrial growth and prosperity. Industrial growth and prosperity implies economic and social progress and prosperity. It is one which is opposite of industrial unrest or a state of instability and trouble. Industrial peace is something that benefits every segment of society, employees, employers, suppliers, customers, lenders, stock holders and above all the government.

Industrial peace is an ideal situation characterized by sound employer and employee relations, high employee morale, low rates of labour turnover and absenteeism, more output with high quality at lower cost.

Industrial peace is not the product that is available and which can be bought and installed. It is to be created, cultivated, maintained and improved.

It calls for cautions, continuous and sacrifice of individualism. Industrial peace is the outcome of strong trade unionism featured by democratic, enlightened and constructive leadership, progressive and positive outlook of managements, effective communication system for open-door negotiations, faith in democratic and peaceful mean of settlement of disputes, if any, encouraging collective bargaining, employee participation, congenial physical and psychological working conditions, acceptable and progressive employee remuneration, supportive and protective governmental policies in favour of working class, employee education and employment. Industrial peace is the outcome is those who are party to it and contribute towards it.

5. Employee training and development:

One of the most disturbing aspects of majority organisations is that they perceive costs incurred on training as burden on the financial front instead of treating it as an investment. The implications of this relatively low level of investment are that many front-line staff is expected to deliver high levels of quality service without the skills or the knowledge of what they are trying to achieve.

Both experienced and newly hired employees need training to help them in their new roles that they are going to play. However, their needs are different from one another.

Experienced employees usually have more difficulty in accepting the decision-making responsibility, because, they are used to reverse delegation which means the problems to their bosses or perhaps to another department.

It is not the case with the new entrants. In this regard, the companies are moving away from blanket training and turning to competency based recruitment as an alternative.

There are six competencies such as initiative – problem solving skills – customer orientation – technical skills, work style and behaviour. Training and development is that crucial process which brings about suitable changes in employee attitudes, skills and abilities to make them full-steamed power packed persons to increase organisational effectiveness and make them service minded with loyalty and productivity.

E. Corporate resources factors:

Corporate resource factors are the parameters of corporate strength and weakness. If external forces give opportunities and threats to the corporation, these opportunities can be en-cashed or left out based on the internal forces namely strengths and weakness.

The corporate resource factors to be considered among other things are: Corporate image and status, the Chief Executive Officer, size of the company, corporate performance record, financial health and corporate structure and systems.

Let us note these factors in brief:

1. The corporate image:

Corporate status or image has its own impinging effect on competitors. Company as an artificial person has its own personality, standing and status. In this dynamic and highly competitive world the “image” of “corporate” image has its own place. The trend is not the “biggest” but the “latest”.

A corporate image is the outcome of good many inputs for which it has to struggle over years. It is determined by its philosophy, attitude, mission, objectives, policies and practices it is following. A corporate image or its outstanding character from others is seen basically in capital-market, product market, labour-market and public relations.

Generally the goodwill or the premium placed by the general public and corporate publics is determined by its financial soundness and discipline, profitability, product image including brand image and its relations with labour the human-side of management. The company image or personality is built over years and it is not a sudden and accidental picture.

Again, the image once achieved in terms of turnover, investment, man-power absorption, technology employed, research and developmental activities, its care for societal and environmental development and maintenance, rate of return, the growth rate all are to be maintained and refined under ever changing circ*mstances.

2. The Chief executive officer:

The success or failure of any organisation is founded on the head and shoulders of CEO or the chief executive officer. He is the king maker or trouble maker. It he who makes or mars the things.

CEO is the top most officers- the crown of the organisation. Good and effective leadership qualities of a CEO go a long way in future prosperity, progress and achievement or otherwise.

The starting point is vision, courage of conviction and judgment the most significant mental faculties of a CEO that make him to move the organisation at full steam to Skim the cream for the benefit of one and all.

Though ail have dreams – both morning and day, they do not come true:

However, very few of us realize that a positive vision about the future ignites hopes and passions about successes and brings meanings to our lives and living and the field of work.

It is the visions, courage of conviction and the sound judgment of leaders that have made the world to achieve successes that none could ever imagine. Leave aside business leader let us take the great personalities like Martin Luther King, who said “I HAVE A DREAM” and he spelt it out of world peace and he succeeded even by sacrificing his life.

Take another case of John. F. Kennedy, who said “WE SHALL SEND A MAN ON THE MOON AND BRING HIM BACK SAFELY ON THIS EARTH” These words, came true. A CEO has a killer instinct, ability to achieve, a strong – marketing acumen with strong financial backing.

Similarly, every CEO who runs his company has a vision in his head as to what he wants the company to look like in the future. The next job is to spend time in articulating his vision to all the levels of the organisation; such visions resemble to those of magnates around which all the activities of the organisation are focused.

A visionary sees the business as a place to apply his original vision producing disposable products for mass consumption at lowest manufacturing and distribution costs.

Though individuals have believed their leader’s visions about the future and have seen their dreams came true, very few CEOs in the corporate jungle and used to develop vision about future for either they are not used to thinking in this direction due to limited paradigms or are simply fighting today without thinking about future.

However, one cannot forget that a dream, a vision about the shape of things to come will caution one against the risks that one is taking or are on the way of which business is being conducted.

Every CEO must use three keys to predict the future namely anticipation and intuition – innovation and excellence – all depend on his mental traits supported by physical and character qualities.

3. The size of the company:

The optimum utilisation of company resources is dependent upon the size of the organisation. Size represents the scale of operation that is large – or small or medium. What is “large” – “small” or “medium” size is a matter of relativity.

Taking certain parameters one can say that a corporate is of “large” or “medium” or “small” size. This concept is best defined by the governments of the nation mostly based on investment, employability.

However, we have certain input and output measures. The input measures are: capital investment, number of persons employed, amount of power used, and amount of raw-materials consumed, plant capacity, the total size of assets.

The output measures are the volume of output, value of output and the amount of income tax paid. It is left to the individual company whether it wants to be in small sector or large for there is definite reasons for being growing or remaining small.

4. The corporate performance record:

The corporate profile speaks of its origin, ups and down, path and rate of progress achieved or failed to achieve, philosophies followed, policies designed, strategies employed to move up and up to dizzy heights and retain that zenith point for longer time.

It is because; taking birth, growing, reaching the point of pinnacle and then withering away are the common features of these natural and artificial persons.

Take the annual Economic Time Top 500 corporate units. It ranks every company based on the accepted parameters how each company fared well. Economic Times of 9th May 1996 reports that Reliance Industries has become India’s first private sector company to post a total income of over Rs. 8,000 crores, with a record profit of Rs. 1,305 crores for the year 31st March 1996 which is 22.5 percent higher than previous year. The company’s sales increased by 11 percent to a figure of Rs. 7.786 crores. The profile of growth implies a mega-league.

The following statement makes it very clear:

Growth Profile of Reliance Ind. Ltd:

What is astonishing is that the company expects to reach growth target of 20 to 30 percent as against nominal overall growth of two percent.

5. Financial health of the company:

Company financial health speaks of asset liability position on one hand and proportion of fixed assets to working assets, debt equity ratio or leverage ratios. It also relates to financial and operating leverage.

More important is financial discipline that is followed. The resources both human and material are greatly and deeply influenced by the financial resources.

Good many companies have failed not because of shortage of capital or monetary resources but misuse of funds. Judicious allocation of financial resources and continuous monitoring of financial results would go a long way in keeping the company’s financial health in sound position which helps to compete with others.

6. The Structure and the systems:

A successful organisation is one which changes its strategies, operations and redefines its organisational structure and markets as it moves from one phase of organisational life-cycle to another. Like a product life cycle, each organisation has art organisational life cycle.

Broadly, these phases can be the phase of infancy or the high growth phase; the second phase namely middle age or the stabilizing phase; the third phase namely maturity or the restructuring phase and the last phase- the death or the declining phase. A successful organisation naturally goes through only the first three phases.

The fourth phase may occur not for entire organisation but for a particular branch, division or a product of the organisation. As far as the specific division or branch of the organisation is involved, the organisation, in order to maintain the group’s existence will warrant the decision on divestment.

Selling or scrapping the declining division or a branch or a product as dead wood is an ugly spot on the mammoth green tree. The structure designed is to serve the changing organisational goals.

The organisation structure should try to gain market share in different geographical segments, income segments through appropriate pricing, distribution and promotion strategies as it moves from sun-rise stage to sunset stage.

While some organisations believe in maintenance of areas of core competence and diversifying in and around them, others believe in diversifications in high growth potential sectors, which may be totally unrelated to the core-products.

What is important is that the organisation structures and systems existing must be amended, redefined, and refined to fit in according to the changing demands of external environmental factors.

Today’s competitive and fast changing business world needs flat, sleek, slim and trim type of organisational structures. Good many organisations are capable of developing systems or arrangements that enhance company skills.

Generally such arrangements result in enhanced positions of advantages by virtue of strengthening a company’s ties with the customers.

To mention a few of this kind can be:

(a) Long-term contractual arrangements whereby customers receive special prices or services in exchange for buying in specified quantities.

(b) Complementary products and services that enhance the value utilization of the main product and

(c) Customised product specifications or Customised on-line product ordering systems that simplify customer ordering.

From the foregoing pages we could identify as many as five major functional categories providing wide range of competitive advantage factors or sources. In the final analysis, the competitive cost advantage is reflected in comparative cost advantage or differentiation advantage.

A cost or differential advantage might stem from unique production facilities, latest technologies, effective inventory management, innovative and judicious use of raw-materials, highly professionalized management, effective and efficient distribution and the unique communication mix used to build customers.