Question A1

Having less fixed assets than rival firms can provide major competitive advantages in a global recession. For example, Apple has no manufacturing facilities of its own, and rival Sony has 57 electronics factories. Apple relies exclusively on contract manufacturers for production of all of its products, whereas Sony owns its own plants. Less fixed assets has enabled Apple to remain financially lean with virtually no long-term debt. Sony, in contrast, has built up massive debt on its balance sheet. CEO Paco Underhill of Envirosell says, Where it used to be a polite war, its now a 21st-century bar fight, where everybody is competing with everyone else for the customers money. Shoppers are trading down, so Nordstrom is taking customers from Neiman Marcus and Saks Fifth Avenue, T.J. Maxx and Marshalls are taking customers from most other stores in the mall, and even Family Dollar is taking revenues from WalMart. Getting and keeping competitive advantage is essential for long-term success in an organization. Pursuit of competitive advantage leads to organizational success or failure. Strategic management researchers and practitioners alike desire to better understand the nature and role of competitive advantage in various industries. Normally, a firm can sustain a competitive advantage for only a certain period due to rival firms imitating and undermining that advantage. Thus, it is not adequate to simply obtain competitive advantage. A firm must strive to achieve sustained competitive advantage.

Based on above case study/article, answer all of the following questions:

a) Describe competitive advantage with appropriate example.

b) Discuss the 5 (FIVE) strategies for sustaining competitive advantage