In organisations influence on success of nations. Nonetheless,

In today’s business environment, it is important organisations make
decisions that increase competitive advantage (Partridge, 1999). The models
highlighted below should be considered when making strategic decisions:
Porter’s Diamond Model, VRIO framework and Ansoff’s matrix.

 

Porter developed the Diamond model to analyse an organisation’s
competitive position (Chikan, 2008). There are four factors to competitive
advantage: firm strategy and rivalry; demand conditions; related and supporting
industries; and factor input conditions (Porter, 1990).

 

Zhang and London (2003) argue the model is the favourite competitiveness
theory used by organisations. Lall (2001) agrees stating it is beneficial when
analysing how to translate current strengths into international advantages, to help
formulate strategic goals (Ahlstrom and Bruton, 2012).

 

An organisation consistent with this model is Volkswagen shown by their
position in Germany’s car manufacturing industry. Tran (2016) indicates the industry
has a regional advantage due to demand conditions of consumers. Their sophistication
increases quality required from Volkswagen and competitors such as Audi (Jürgens, 2000). Furthermore, Grant (1991) states the natural
resources in the iron and steel industry lent themselves to development of the industry.
Lastly, German universities focus on producing skilled engineers coupled with
investment from the Government into innovative technology such as the hybrid
car benefits Volkwagen (Proff, 2000) who uses their strengths to pursue success
in other countries, in line with corporate strategy to deliver efficient and innovative
products globally (Volskwagen, 2016).

 

The model is criticised for an excessively domestic focus and is too
general for national competitiveness construct (Fainshmidt, Smith and Judge,
2016). Davies and Ellis (2000) state there are other ways to increase
competitiveness which lead to a more accurate approach. Fainshmidt et al (2016)
argue these have not been tested and declare many scholars have used the model including
Porter and Ketels (2003); and Hoefter (2001). Griffiths and Zammuto (2005) argue
Porter focused on ten countries when developing the model and does not take
into account multinational organisations influence on success of nations. Nonetheless,
the model is still widely used by successful organisations, including Volskwagen,
to create informed decisions. However, the model should not be used in
isolation when looking to gain competitive advantage and managers should
consider other factors such as MNE penetration and governance quality
(Fainshmidt et al, 2016). 

 

Another model that can be applied to
gain competitive advantage is Barney’s VRIO framework which is an improvement
of the VRIN model (Barney, 2014). The framework asks whether a firm’s resources
and capabilities are: valuable; rare; costly to imitate; and organised to
capture value (Kauerhof, 2017). Wernerfelt (1984) argued VRIO is the basis for
internal analysis and is the foundation of the resource-based view of an
organisation. Rothaermel (2015) later said it benefits managers when decision-making
by evaluating current capabilities.

 

As shown in appendix 1, when
applied to Starbucks and their global presence the organisation meets all four criteria.
For example, it is valuable in the coffee industry to be globally available to
consumers to increase revenue and market share. Whilst many coffee chains are
global, Starbucks is the most popular and it would be difficult for competitors
to imitate this. Starbucks has exploited this and their latest strategy
represents their plan to further build on global partnerships (Starbucks,
2017). This capability highlights to Starbucks their competitive advantage to maximise potential,
which Mizik and Jacobson (2003) state drives value in decisions.

 

Another resource
is their specialty coffees; however, it only has competitive parity because it
is not limited to Starbucks and can be imitated, despite this Starbucks are
still renowned for their coffees. Knott (2015) states this as a limitation of VRIO
as it fails to evaluate a resource disadvantage and the risk of pursing it. Therefore,
for Starbucks to evaluate the risk of their specialty drinks, Knott (2015) acknowledges
they will have to consider other factors.

 

Guo (2007) states VRIO is
characterised by simplicity and clarity and is the starting point in
understanding how to move forward. Sanchez (2008) said for a deeper
understanding of competitiveness, VRIO should be accompanied with other
analytical techniques. Caldart (2011) argues the PESTEL framework complements
the model and gives greater understanding of the macro-environment. This also
overcomes further criticisms of VRIO stating it does not consider the
ever-changing economy.

 

Another model useful for analysing
strategic growth options is Ansoff’s Matrix which proposed four potential
strategies: market penetration; market development; product development; and
diversification (Ansoff, 1980). Graham (2007) states it closes the gap between
aims of an organisation and required results, as gives focus to managers
through identification of new strategies for future products to stake out a
competitive position.

 

Coca-Cola has used this model as
represented in Appendix 2. For example, Coca-Cola launched Diet Coke in 1982
(Staff, 2017) but have used market penetration to adapt aspects to meet changing
customer needs and as such has been highly successful. Vrontis and Sharp (2003)
state Coca-Cola used market development through sale of their share-size 1.25
litre bottle, after growing demand from households of 1-2 people, helping to target
new areas of their existing market. Coca-Cola also extended their product range
through creation of Fanta after consumers wanted a new flavour drink (Coca-Cola
company, 2017). Finally, the launch of PowerAde was a risk for Coca-Cola due to
its distinctiveness.

 

Siegemund (2008) states the model illustrates
risk associated with each strategy: each time a business moves into a new
quadrant of the model risk increases, and therefore for businesses looking to
increase their competitive advantage managers can consider impact of any
decision made. Ward (2005) argues the model does not evaluate which risks are
worth pursuing; therefore, the model is a starting point for identifying growth
options. McKinsey (2008) created the nine-box matrix which offers a more
sophisticated approach, see appendix 3, and is favoured over the Ansoff matrix
by some marketers as it priorities strategies amongst business units in
competitive scenarios (Morrison and Wensley, 1991). Recent theorists agree
stating the matrix helps to better address decision-making issues linked to
differentiation of products (Amatulli, Caputo and Guido, 2011).

 

Some theorists state Ansoff’s
matrix can result in overuse of analysis. Ansoff (2008) recognised too often
the model resulted in “paralysis by analysis”, he encourages flexibility when planning
to ensure an informed decision is made. Alam (2006) says despite it being simplistic
the model has a role in decision-making and is effective for showing opportunity
cost.

 

For businesses looking to increase
and sustain competitive advantage, it is essential to consider relevant
strategic management frameworks including the models discussed above. Analysis
in the business environment, including market trends and competition, helps to give
understanding to managers enabling them to implement informed strategic
decisions on a corporate level.