What about if we were to put a question mark after one of the most vital objectives that companies must create to be able to successfully compete in their industry? Show I am referring to the very well know concept of “sustainable competitive advantage” and how it was questioned by professor Richard D’Aveni who believes that we have entered an era where companies are operating in a fast-changing environment where one of the key elements is the absence of a “long-haul” competitive advantage and where companies aim to specifically disrupt the one created by market leaders. We all know that the era of dominating giants such as IBM, General Electrics, General Motors, etc., it has now been replaced by several aggressive competitors that have been tirelessly trying to disrupt their industry and knock the current leaders off their thrones. According to D’Aveni dominating giants that had been ripped apart by the competition should not be considered as a legacy of the past since contemporary giants of the likes of Microsoft that seem almost untouchable could end up all of a sudden becoming obsolete. How? That is something it is not know of course but it is worth remembering that not long ago everyone thought that IBM was invincible. The sustainable competitive advantage that perhaps we still consider as a strong shield against the competition has now become some sort of comfortable blanket that unfortunately could be swept off by the new wind of hypercompetition. Hypercompetition is the result of the dynamic strategic manoeuvring happening among industry players at a global level. “It is a condition of rapidly escalating competition based on price-quality positioning, competition to create new know-how and establish first-mover advantage, competition to protect or invade established product or geographic markets, and competition based on deep pockets and the creation of even deeper pocketed alliances” In this type of environment, competitors are making bold and aggressive decisions very frequently which contribute towards a condition of constant disequilibrium and change. With that said, the whole point of this article is to consider that the creation of competitive advantage is still possible with the only caveat that we should treat it as a short-term condition rather than something that once achieved could be left “running” on its own. This is the point where the D’Aveni 7s framework comes into action and tells us that we can indeed succeed even in hypercompetitive environment by considering the help of the following 7 key points.
Now that it is clearer about what the 7S’s are about, it is worth mentioning that the seven points are related to four key goals which are based on understanding long-term dynamic strategic interactions such as: disrupting the status quo, creating temporary advantage, seizing the initiative, and sustaining the momentum. These four key goals are expanded in D’aveni’s paper called “Hypercompetition: Utilizing the New 7S's Framework” (see link at the bottom of the article) Another important point raised in the paper is about considering that it is unlikely that companies could cover all 7 points equally well; hence the need of the tradeoffs, which as for the four key points above, are further expanded in D’Aveni’s paper. Because of these tradeoffs, companies can analyse competitors to identify their tradeoffs with the aim of focusing on the competitor’s weak spot(s). Even when competitors are aware about being targeted on particular weak areas, they would likely have to deplete their strengths in other stronger areas in order to counterattack. However, hypercompetitive companies are always working very hard to find ways to eliminate tradeoffs and this has been witnessed when looking at firms that have master the paradox of low-cost and high-quality products. In essence, the framework sends us the message that we should not try to ride the wave of change, but we should make it instead, with the emphasis on the importance of speed and disruption of the status quo. In conclusion, I would say that as for any other framework, this is certainly no exception; therefore, we should not treat it as a magic formula for the success of our firm but more as an extra tool to create temporary competitive advantage in the world of hypercompetition. https://www.jstor.org/stable/4165272 What is meant by hypercompetition?Hypercompetition, a term first coined in business strategy by Richard D'Aveni, describes a dynamic competitive world in which no action or advantage can be sustained for long. Hypercompetition is a key feature of the new global digital economy.
What are the features of hypercompetition?Hypercompetition is characterized by four driving forces: customer changes, technological change, falling industry boundaries and deep pockets among competitors (Rifkin, 1996). These driving forces encourage competitiveness and have thus resulted in hypercompetition.
How does hypercompetition affect strategic management?In strategic management, hypercompetition is a condition when the competition is so intense, creating instability in the market. These conditions require companies to change strategies continuously. Companies maneuver with each other so that changing market dynamics quickly.
What is the concept of competitive strategy?In other words, competitive strategy means to define how the firm intends to create and maintain a competitive advantage with respect to competitors. Holding a competitive advantage over competitors means to be more profitable than competitors over the long term.
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