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Archives of Business Research – Vol. 8, No. 8

Publication Date: August 25, 2020

DOI: 10.14738/abr.88.8910.

Cudjoe, K. F. (2020). Promoting Organizational Success With Effective Competitive Strategy: Examination And Analysis Of Competitive

Strategies Of IBM And DELL Within The IT Industry. Archives of Business Research, 8(8). 306-320.

Promoting Organizational Success With Effective Competitive

Strategy: Examination And Analysis Of Competitive Strategies Of

IBM And DELL Within The IT Industry

Dr. Francis Kwadade Cudjoe

FBCS, FIMIS, PhD, MBA, BSc (Hons)

Senior Lecturer, Knutsford University College

Adjunct Lecturer, GIMPA Business School, Accra, Ghana.

ABSTRACT

Achieving organizational success has always been the bane of

businesses, but it is an important requirement for every business. The

best approach to achieving this success is to develop a good and

effective strategy; the modus operandi for organizational success to

achieving competitive advantage. Most organizations work tirelessly to

establish strategies to enable the achievement of goals and objectives,

but understanding what entails in establishing effective strategies has

never been easy. However, once the resources of the organization are

identified, and putting together concrete activities to perform on the

resources, an effective competitive strategy could be established,

which should lead to competitive advantage. Sustaining an

organizational competitive advantage is very necessary, so as to create

an enabling environment for sustainability, and in addition

profitability, whilst pursuing its functions. Fact is, a lot of capital is

always expended before a business is founded, and this investment

cannot be squandered, but be recouped. Therefore, structuring an

effective competitive strategy at the very beginning, is a must for every

organization. The generic competitive strategies are cost leadership,

differentiation and niche / focus.

Keywords: Resource, Capital, Competitors, Competitive Advantage and

Sustained Competitive Advantage.

INTRODUCTION

Strategy is defined as an activity or set of things one intends to do in order to achieve an objective

(Hornby, 2001). The military connections remind us of the source of Strategy – The Art of War,

written by Sun Tzu, a Chinese General who 2,500 years ago put together a structured approach for

achieving the objective of prevailing in war (Sawyer, 2005). The word Strategy has since been

adopted in modern business thinking.

Strategy, in the modern business setting, is about what to do to take an organization from where

it is currently to where it should be, within a specified period. Strategy is a method or plan chosen

to bring about a desired change within a certain period, such as achieving an organizational goal

or solution to a problem. It can also be the art and science of planning and marshalling the use of

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Archives of Business Research (ABR) Vol.8, Issue 8, August-2020

resources for their most efficient and effective use to achieving organisational goals (De Wit &

Meyer, 2004).

Competitive Strategy as defined by Michael Porter in De Wit and Meyer (2004:258) “is a search for

a favourable competitive position in an industry” that “aims to establish a profitable and

sustainable position” against the environmental forces that determine industry competition. It is

this competition (among supplier power, buyer power, barriers to entry, threat of substitutes, and

degree / intensity of rivalry – Porter’s 5 Forces Model) that determines the appropriate activities

an organization must engage in, to contribute to its performance within the industry (De Wit &

Meyer, 2004).

These activities of the organization might in turn have emerged from the set of decisions and

actions used by the management to formulate and implement strategies that will provide a

competitively superior fit between the company and its environment so as to achieve its goals –

the strategic management of the company (Daft, 2003).

Competitive advantage, which determines an organizational survival, and is derived from the

competitive strategy of the organization, is ultimately built and maintained by offering acceptable

quality products / services at a lower cost than competitors - cost leadership; offering quality

products / services that are perceived to be unique, and relative to some important consumer

characteristics – differentiation; by adopting any of the above (cost leadership or differentiation),

but in a narrow-based segment – niche focus; or the combination of the features of cost leadership

and differentiation (De Wit & Meyer, 2004).

A firm has a competitive advantage when it is successfully implementing a value creating strategy

not simultaneously being employed by any current / potential competitors (De Wit & Meyer,

2004).

However, sustained competitive advantage, which would enable the organization to be sustainable

and profitable in addition to having competitive advantage, “is the result of an enduring value

differential between the products / services of the firm and those of its competitors in the minds

of customers” (Thompson & Strickland, 2001:500). A firm has a sustained competitive advantage

when it is successfully implementing a value creating strategy not simultaneously being employed

by any current / potential competitors, and when these other firms are unable to duplicate the

benefits of this strategy (De Wit & Meyer, 2004).

Achieving sustainable competitive advantage therefore:

i. depends on the ability of the organization to protect its innovation from copying by rivals

through legal restrictions, e.g. patents;

ii. protect products / services from being copied, e.g. through copyright and trademark;

iii. branding of the organization, e.g. through effective brand names;

iv. having a wider access to the market, e.g. globalization; and

vi. sustaining the competitive advantage so achieved.

THE GENERIC STRATEGIES

According to Michael Porter, there are 3 generic strategies. These are;

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URL: http://dx.doi.org/10.14738/abr.88.8910 308

Cudjoe, K. F. (2020). Promoting Organizational Success With Effective Competitive Strategy: Examination And Analysis Of Competitive Strategies Of

IBM And DELL Within The IT Industry. Archives of Business Research, 8(8). 306-320.

• cost leadership,

• differentiation, and

• niche / focus (De Wit & Meyer, 2004).

Whilst these strategies are useful for identifying an organization’s position within the market, it is

questionable, especially where Porter emphasizes the importance of adopting only one strategy for

competitive advantage. To buttress this point, Porter added that, an organization cannot adopt all

the generic strategies at the same time, as that becomes a recipe for strategic mediocrity, and would

achieve-average performance (De Wit & Meyer, 2004).

Cost Leadership Strategy

Cost leadership strategy is perhaps the pleasantest of the three generic strategies. It is where a firm

has acceptable / quality products, but below-average costs and commanding above-average prices

to enable it earn above-average profits (De Wit & Meyer, 2004). The firm has a broad scope and

serves many industry segments, and likely to operate in related industries, as the coverage is often

important to its cost advantage (De Wit & Meyer, 2004). Simply put, it is where a firm produces

acceptable products, but at a less production cost than competitors.

The sources are varied, and may include the pursuit of economies of scale, proprietary technology

and preferential access to raw materials. This strategy makes the firm the lowest-cost producer

within the industry. This can be possible if it would be an above-average performer in its industry,

have quality and acceptable products relative to its competitors, and can command prices at or

near the industry average (De Wit & Meyer, 2004).

Furthermore, in order to keep costs below those of rivals, management have to include features

and services that buyers consider essential, example, a product offering that is accepted by buyers

and pursuing cost reduction in a manner that does not destroy the attractiveness of the

organization’s product offerings (Thompson & Strickland, 2001).

Differentiation Strategy

Differentiation is where a firm seeks to be unique in its industry along some dimensions widely

valued by buyers, by selecting one or more attributes that many buyers perceive as important, and

uniquely positioning itself to meet those needs. It can simply be referred to as, where a firm

produces quality products that are unique, and with characteristics of the customers in mind.

To achieve differentiation, the uniqueness must be of value to the customer and be difficult to copy.

Differentiation can be selected from the product itself, the delivery system, the marketing

approach, creation of a strong brand or a broad range of other factors (De Wit and Meyer, 2004;

Thompson & Strickland, 2001).

Differentiation is an attractive competitive approach whenever buyers’ needs and preferences are

too diverse to be fully satisfied by a standardized product or by sellers with identical capabilities.

A successful differentiated firm is one which studies buyers’ needs and behaviour cautiously to

learn what buyers contemplate to be important, what they think has value, and what they are

willing to pay for. Then the firm goes ahead to integrate these buyer-desired attributes into its