Academic journal article International Management Review

Management of Business Processes Can Help an Organization Achieve Competitive Advantage

Academic journal article International Management Review

Management of Business Processes Can Help an Organization Achieve Competitive Advantage

Article excerpt

[Abstract] Competitive advantage can be considered as an advantage, condition, or position that facilitates more efficient operation and higher quality products and/or services for an organization. According to Michael Porter, if earnings exceed costs, then an organization is said to achieve competitive advantage. Competitive advantage in Porter's perspective is being able to increase earnings despite the competitive pressures. This is one of the aspects of gaining competitive advantage. The other aspect was well explained by Rayport and Sviokla, where by analyzing the stages of a value chain, the organization is able to redesign its internal and external processes to improve efficiency and effectiveness. The value chain is a model that describes a series of value-adding activities connecting a company's supply side with its demand side. The value-adding functions of a firm are divided into major and support. The major functions are operations, marketing, accounting and finance, and product service development. The support functions may be human resource management, purchasing, and technical function, etc. In order for an organization to achieve competitive advantage, all functions must be related to each other. The operations function adds value by using the organization's resources effectively and by producing goods and services that satisfy the needs and requirements of the customers.

The Japanese car manufacturer, Toyota, was able to add value to its products because of its innovative product-design process and Six Sigma methodology. In addition, all organizational functions are also integrated into a single process. If enterprises are to remain competitive, they need to reduce the complexities resulting from widely dispersed and often disparate business processes. Establishing consistent core business processes and managing them are just two steps toward meeting increasing customer expectations in today's market. From a process perspective, Managing Business Process is regarded as a best practice management principle to help companies sustain competitive advantage. This paper reviews and examines the key concepts of Business Processes, Management of business process (BPM) and its effects on organizational performance. This paper contributes to a better understanding of the field of competitive advantage and business process management.

[Keywords] competitive advantage; business processes; value chain; core business processes; business processes management (BPM); support functions

Overview of Competitive Advantage

A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. It is a condition which enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefits accruing to that company. Competitive advantage is the position of a company in a competitive landscape that allows the company to earn return on investments higher than the cost of investments. A competitive advantage essentially has to be one that not only merely represents better performance than that of its competitors, but also delivers genuine value to the customer, thus ensuring a dominant position in the market.

When Does Competitive Advantage Occurs

Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. A firm is said to have a competitive advantage when it implements a value-creating strategy not simultaneously being implemented by any current or potential player. Successfully implemented strategies will lift a firm to superior performance by facilitating the firm with competitive advantage to outperform current or potential players. To gain competitive advantage, a business strategy of a firm manipulates the various resources over which it has direct control, and these resources have the ability to generate competitive advantage. …

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