What is competitive advantage?
Competitive
advantage occurs when an organization acquires or develops an attribute or
combination of attributes that allows it to outperform its competitors.
Company Profile: Siemens AG
Siemens
AG is a German multinational conglomerate company headquartered in Berlin and
Munich. It is the largest engineering company in Europe. The principal
divisions of the company are Industry, Energy, Healthcare, and Infrastructure
& Cities, which represent the main activities of the company. The company
is a prominent maker of medical diagnostics equipment and its medical
health-care division, which generates about 12 percent of the company’s total
sales, is its second-most profitable unit, after the industrial automation
division.
Company Profile: General Electric
General
Electric (GE) is an American multinational conglomerate corporation
incorporated in New York and headquartered in Fairfield, Connecticut. The
company operates through the following segments: Technology Infrastructure,
Capital Finance, and Consumer and Industrial.
Rivalry between Siemens and GE
Siemens
and GE has been each other’s rival counterpart for decades. GE has been the more
dominant one in the feud: most recently demonstrated through Siemens losing to
GE in bidding for the acquisition of the French conglomerate Alstom. The only
way for Siemens to get to the top is through gaining competitive advantage over
GE.
— New Technologies: Siemens may invest more in R&D
to innovate and create new possibilities for the design of their products, the
way they are marketed, produced, delivered and the after sales service
provided. It is the most common way for
strategic innovation. However, this will only work on new companies in cases
where the shifting costs are really high (for example, infrastructure and
energy industries).
— New or Shifting Buyer Needs: If we consider the case of
technology, newer are invented and sold in the market while the older ones are
becoming obsolete rapidly. Siemens could focus on finding the shifts in the
buyer needs in the industries it serve and then target to serve those segments
with something new and better.
— Emergence of New Industry Segment: A new way is conceived to regroup
existing segments can create competitive advantage. The possibilities encompass
not only new customer segments but also new way of producing particular items
in a product line or new ways to reach a particular group of customers.
— Shifting Input Cost or Availability:
Siemens may
consider shifting its manufacturing segments in Asia as it would reduce its
resource costs by a huge chunk, and create scope for it to grow through
investment and as well as through attracting buyers by cutting prices.
— Change in Government Regulations: Adjustments in the nature of
government regulation in areas such as product standard, environmental
controls, restrictions in entry and the trade barriers can allow Siemens to
create competitive advantage over GE.
http://www.wsws.org/en/articles/2014/07/31/alst-j31.html
