Industry Analysis and Competitive Advantage: A Review

Define the term hypercompetition with an example. Identify a firm that competes in a hypercompetitive industry.

Hypercompetition is a situation when competition is so intense, such that there is market instability. It happens when organizations use tactics to disrupt the competitive advantage held by the industry leaders. For example, if a fast-food restaurant has its products priced higher than its rival, it could decide to adjust the prices to be lower or even closer to the rival’s prices hence causing hypercompetition. An example of a company in hypercompetition is Netflix. A few years ago, Netflix shifted the rules of DVD rental industry by allowing people to rent DVDs through mail, and went further into disrupting the industry until it resulted into online streaming.

Explain how the five partners (flagship) model developed by Rugman and D’Cruz differ from Porter’s five forces model?

The porters five forces model is relatively simple and consists of forces that affect an industry; competitive rivalry, buyer power, threat of substitution and threat of new entry. The five partners model consist of key suppliers, key consumers, key customers, selected competitors and non-business infrastructure. The flagship model is more relevant to today’s business environment because it highlights the significant of a company working with numerous groups of people or businesses to succeed. On the other hand, the Porter’s model is focused on what a company does on itself. Porter’s model is based on corporate individualism and individual business transactions, which is not the case with the flagship model. The five partners model emphasizes cooperative behavior in network relationships whereas the five forces model of Porter emphasizes rivalry and entry barriers and mechanisms to exercise power and achieve competitive advantage (Rugman, 2002, p. 347).

Determine how FedEx uses dynamic strategic interactions to compete in each arena listed in the model on 16-2, which are cost and quality, timing and know-how, entry barriers, and deep pockets.

FedEx uses the Quality Driven Management (QDM) to generate cost savings and grow revenue. This approach empowers team members to become creators of change at the company, which leads to elimination of waste and cost. While applying QDM, FedEx pays great attention to collaboration between staff at all levels to ensure quality. FedEx leverages Internet of Things (IoT) to improve the quality of services and improve the efficiency of operations. The company has substantial experience in the industry and has over years created a strategy that focuses on entering new markets or expanding at the right time. FedEx was able to eliminate entry barriers for itself while magnifying them for its rivals. For instance, FedEx was able to eliminate the government regulations barrier and used it to its advantage by securing short-term hold on smaller jets and gaining exemption on payload capacity. FedEx delivers packages in over 200 countries worldwide. The company is most effective in expanding when it spends on infrastructure. With the right tools – finance – the company finds itself at a better position competitively than the rest of its rivals.

What is the connection if any, between national competitive advantage and a company competitive advantage?

National environment exerts more pressure to companies to innovate and gain competitive advantage with time. Companies achieve competitive advantage through innovation. These companies’ capabilities participate in shaping the nation’s competitive advantage. Competitors can eventually overtake any company that stops innovating, hence as a nation is characterized by innovation as a source of competitive advantage, it becomes imperative for companies to continuous innovate to improve (Boyers & Abramson, 2011).

References

Boyers, L., & Abramson, A. (2011). FedEx Plays Catch Up in India. Forbes. https://www.forbes.com/2011/09/09/forbes-india-fedex-winnig-back-lost-ground.html

Rugman, A. M. (2002). International business: Strategic management of multinationals. Taylor & Francis.