Maintaining Competitive Advantage

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Table of Contents

Introduction
Competition strategies
Peculiarity of the service industry
Sustaining competitive advantage
Works Cited

Introduction

Competitive advantage is the superiority gained by organizations and industries due to their provision of services and products that are unique as compared to their competitors in the same market. For firms to maintain competitive advantage, they have to poses key attributes, capabilities and competences.

The firm must be perceived in a different manner by the customers for it to gain competitive advantage. For the service industry to attain competitive advantage, the managers must strategically plan and overcome all challenges and issues in the current market.

Competition strategies

There are various strategies that have been adapted by managers in their quest to increase their market share, that is, to gain the competitive advantage. These strategies revolve around three major concepts; these are;

Cost leadership strategy

This concept entails all the strategies developed by managers to reduce the cost of products and services. When service costs are reduced, the customers tend to demand more based on the law of demand.

Differentiation strategy

In this strategy, the managers try to develop products that are unique and cater for a given group.

Focus strategy

The firms that apply either cost or differentiation strategies tend to target a specific market.

Peculiarity of the service industry

The service industry is more peculiar as compared to other industries in terms of building and sustaining competitive advantage. Firstly, Products are concrete while services are abstract and very hard to define. Secondly, products are homogenous and can be standardized while services are heterogonous and differ from one company to another.

Lastly, services are consumed at their production stage and cannot be stocked to be used later. All these factors make service managers face a more challenging environment when creating competitive advantage (Hatice 4).

In addition to the aforementioned issues regarding the peculiarity of the service industry, managers faced space and time limitations. Most service industries have fixed space and time in regard to the services they offer.

For example, a trainer can only handle a specific number of students while a hotel can only serve a fixed number of customers at a given time. Other issues that affect the service industry include; technology issues, resource constrains and lack of well trained labor force. All these issues need to be addressed for sustained growth of a firm (Sundar, Rajan and John 85).

Sustaining competitive advantage

For the long term success of a company, it is necessary that the company build and sustain competitive advantage. Even for firms with large customer base and a competitive advantage over other firms, it is necessary that sustained competitive advantage to be maintained as erosion mechanisms such as innovations, imitations, resource mobilization and resource paralysis reduce their advantage in the long run. It is therefore imperative that service industries adapt new methods in their quest to gain competitive advantage. Some of these methods include;

Productisation

Capacity and time constrain are some of the major issues that affect the service industry. Most firms in this sector have fixed number of service facilities. The managers need to manage these resources and still gain competitive advantage.

For services that are fixed and time based, it is difficult to generate more profits. However, managers can ensure that the facilities are fully utilized and the firm can generate maximum earning from them. This results into the concept of productisation.

Productisation results into conversion of a service to a product. The service is marketed as if it was a product. The term is corollary to servitisation where a product value is increased by adding services to a product. The process eliminates the time constrain in the service industry. For example, consider a trainer who simply trains people in a given area.

His services are limited in terms of time and capacity of the people he/she can train. However, through productisation, the same trainer can record the information, package it, promote the product and sell it. Currently, most booking offices and bank tellers are being converted into products that are delivered online. This effectively turns the service to a product and a source of income.

The delivery of productized services is a suitable methodology for increasing the service industry’s competitive advantage and results into improved revenues and solid pipelines where firms can generate more income.

In conclusion, the use of productisation results in self services, reduction of the service workers which increases the company’s profits, reduction in heterogeneity and also leads to mass customization (Hofferberth 4). The major aspects and characteristics of productized services include;

Their costs can be quantified
They require specific skills to deliver them and depend on people with consistent knowledge
They require a consistent methodology
They need tools and templates for them to be implemented

Customer focus

One major aspect and necessity for any business is the ability of a product or service to satisfy the customer’s wants and needs. A service must satisfy a given utility. In essence, service provision must focus on the customer’s wants and needs.

For customers to recognize any firm’s services, the services must be offered in a way that they are distinguishable from the ones of the competitors. For customer focus to be archived, the following steps must be followed (Van, Gemmel and Dierdonck 21).

The services must be transformed with regard to the customer’s wants and needs and this must be done in a specific and systematic manner
All the workers of a given firm must collaborate in the identification and development of services that result into customer satisfaction
The company must develop a deep customer focus. This ensures that the developed products cannot be easily imitated by competitors

Use of information technology tools and techniques

The use of information technology in delivering services to the customer is one key area in developing competitive advantage. IT has transformed most industries and enhanced the process of service delivery. The use of productisation coupled with effective use of IT tools can increase the competitive advantage of a given firm.

The use of computers in the service industry reduces the time and space constrains inherent in the service industry. It terms of space, people don’t have to travel to service areas for them to access a given services. For example, students don’t have to go to class physically for them to receive training.

This means that, an online tutor can train hundreds of students located anywhere in the world through services such as video conferencing. The aspect of time is also solved as servicemen don’t have to travel to their client location for them to offer services.

This reduces time wastage for both the client and the service provider. The reduction in physical constrains bought by the use of IT tools also reduce traveling expenses and hence cost effective services can be offered. In culmination, the use of computers and IT tools overcome space, time, cultural and physical barriers that would have otherwise constrained the service industry in its quest to gain competitive advantage.

Works Cited

Hatice, Camgoz. The Fundamental Competitive Strategy in the Service Industry: Quality. 2005. Web.

Hofferberth, David. Service productisation and how organizations can achieve more predictable and consistent services. 2011. Web.

Sundar, Bharadwaj., Rajan, P., and John, P. “Sustainable Competitive Advantage in Service industries: A conceptual model and research propositions”. Journal of marketing 57.3 (1993) 83-99. Print.

Van Looy., B. Gemmel and V. Dierdonck. Services Management.2^nd ed. Essex, England: Pearson Education Limited, (2003). Print.

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