Strategic Finance and Competitive Advantage
Globalization has led to increased competition. Artificial boundaries stop competitors from entering markets and even dominating them. that having and clear competitive advantage has become important organizations. However, of companies have this competitive advantage. because competitive advantages overnight. Competitive advantage cumulative years of decision-making.
There are various competitive advantages possible. Different companies across have used different strategies a competitive advantage which has allowed them to dominate the marketplace. article, have four sources of competitive advantage and explain how linked to strategic financial decisions.
Strategy #1: Reputation:
Coca-Cola literally invented management. They came up with that advertisements be considered an expense. Instead, it should be considered to be an investment that reinforces the brand image of . important , that Coca-Cola’s reputation built overnight. In fact, be impossible overnight, money is spent on marketing. The positive brand image which Coca-Cola enjoys decades of investments made towards goals. that the Coca-Cola Company we see today sustained investments made using the principles of strategic finance. Coca-Cola Company one to use this strategy. There are premium companies in almost every market that have tried to emulate this strategy to some extent.
Strategy #2: Innovation:
some companies investing money in advertisements, there are other companies that investing in research and development. These companies delighting their consumers by providing technologically advanced products market. Now, if these companies be technologically their competitors, then important that they spend large sums on research and development. Apple Corporation is an example of that follows this strategy.
For years, Apple has been the market in providing products that are intuitive to use but advanced at time. This too has not happened overnight . Apple a technological leader was made by finance executives following the principles of strategic finance. Then, over the years, they allocated large sums towards research and development. Finally, this money was develop the iPod, iPhone, and iPad which made Apple leader.
Strategy # 3: Architecture:
There are other companies that build the architecture of their companies in such that it provides them with a competitive advantage. The architecture enabled by rapid advances in information technology. , Dell computers, companies would make and stock laptops. then be distributed market and sold using the push method. Michael Dell revolutionized the industry when he started selling laptops that were made to order. This meant that the order was received first using the advances in information technology, components were assembled at warp speed laptop was delivered within days. Once again, the capabilities which provided a competitive advantage were clearly identified by Dell Corporation, and money was allocated towards enhancing these capabilities. The finances of were strategically directed so increase its competitive capabilities of .
Strategy # 4: Intellectual Assets:
The bottom line is that companies can become successful in ways. important for companies these ways and allocate their finances towards the achievement of that goal. The goal becomes a reality only after sustained strategic efforts over period .