Avoiding Failure And Sustaining Competitive Advantage


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Avoiding Failure And Sustaining Competitive Advantage

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When a company loses its competitive advantage, its profitability falls. The company does not necessarily fail, it may just have average or below-average profitability and can remain in this mode for a considerable time, although its resources & capital base is shrinking.

Reasons for failure:

a)   Inertia:

The Inertia argument says that companies find it difficult to change their strategies & structures in order to adapt to changing competitive conditions.

b)   Prior strategic commitments:

A company’s prior strategic commitment not only limits its ability to imitate rivals but may also cause competitive disadvantage.

c)   The Icarus Paradox:

According to Miler, many companies become so dazzled by their early success that they believe more of the same type of effort is the way to future success.  As a result, they can become so specialized and inner directed that they lose sight of market realities and the fundamental requirements for achieving a competitive advantage.  Sooner or later, this leads to failure.

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We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to contact@bms.co.in.

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