GMS 200 Chapter Notes -Customer Relationship Management, Total Quality Management, Competitive Advantage
DepartmentGlobal Management Studies
Course CodeGMS 200
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Environment and Competitive Advantage – Chapter 4
ENVIRONMENT AND COMPETITIVE ADVANTAGE
Gerstner, Jr. – we believe very strongly that the age-old levers of competition- labour, capital, and land – are being
supplemented by knowledge, and that most successful companies in the future will be those that learn how to exploit
knowledge – knowledge about customer behaviour, markets, economies, technology-faster than their competitors.
→What is competitive advantage?
..allows an organization to deal with the market and environmental forces better than its competitors and gives it an
advantage over them in the marketplace. An organization may achieve competitive advantage in many ways,
including through its products, pricing, customer service, cost efficiency, and quality, among other aspects of operating
Competitive advantage in the demanding global economy can be achieved only by continuously scanning the
environment for opportunities and taking effective action based what is learned
→The general environment
The general environment is composed of cultural, economic, legal-political, and educational conditions.
The following are typical external environment issues:
-Economic conditions: health of the economy in terms of inflation, income levels, GDP, unemployment.
-Socio-cultural conditions: norms, customs, social values, human right etc.
-Legal-political conditions: prevailing philosophy and objectives of the political party
-Technological conditions: development and availability of technology
-Natural environment conditions: nature and conditions of the natural environment
→Stakeholders and Specific Environment
The Specific environment (task environment) consists of the actual
organizations, groups, and persons whom an organization interacts and
conducts business. These are environmental elements of direct
consequence to the organization as it operates on a day-to-day basis.
The specific environment is often described in terms of stakeholders –
persons, groups, and institutions directly affected by an organization--
which include: ( 1 ) customers, ( 2 ) suppliers, ( 3 ) competitors, ( 4 )
regulators ( 5 ) investors/owners.
The analysis helps focus management attention on value creation,- the
extent to which the organization is creating value for, and satisfying needs of, constituencies.
...is a lack of complete information about the environment regarding what exists and what developments may occur.
Makes it difficult to analyze constituencies and their needs, predict
future states, and understand potential implications. There are two
dimensions of environmental uncertainty:
( 1 ) complexity, or the number of different factors in the market
( 2 ) the rate of change in these factors
Greater uncertainty requires need for concentrated attention,
The missing link in the quest for competitive advantage: customer service.
→Who are customers?
External customers purchase the goods produced or utilize the services
provided. (May be industrial consumers—that buy a company’s products
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