Foundations of Corporate Success: How Business Strategies Add Value

By John A. Kay | Go to book overview
Save to active project

CHAPTER
11
Sustainability

Distinctive capabilities continue to add value only if both the capability, and the distinctiveness, are sustainable. In this chapter I draw on case studies and statistical evidence to show that many companies are indeed successful in building sustainable competitive advantages from their distinctive capabilities. Of the primary distinctive capabilities, reputation is generally the easiest to sustain, innovation the most difficult, but each poses its own particular problems. Strategic assets can often be defended over very lengthy periods, but may be suddenly at risk when there are changes in regulation or market conditions. For a firm with strategic assets, skills in handling public policy may be as important as those of business management.

In the second part of the chapter I use the test of sustainability to explain why some factors which are often cited as sources of competitive advantage rarely yield substantial added value in the long run. I look at the role of scale, of market share, of business portfolio diversification, and of market positioning in achieving corporate success. Sometimes size or scale are themselves the product of distinctive capabilities. Sometimes diversification or positioning is the reflection of a distinctive capability. But if these factors are not based on distinctive capabilities, then competitive advantages derived from them rarely persist in the face of entry by firms which do enjoy true distinctive capabilities based on architecture, reputation, or innovation.

BMW, Honda, and Glaxo built effective strategies in support of their competitive advantages. BMW has added a powerful additional source of competitive advantage in branding and reputation to its initial distinctive capability. In the last few years, it has become possible for Japanese companies to attempt to match the BMW architecture. They have an equivalent network of suppliers, and a production-line labour force of comparable quality. At the same time the growth of sophisticated production control systems has reduced the number of workers required, and the complexity of relationships

-160-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Foundations of Corporate Success: How Business Strategies Add Value
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 416

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?