The role and importance of creativity and innovation in generating Essay

The role and importance of creativity and innovation in generating competitive advantage - Essay Example Porter has emphasized that the motivation behind the formulation and adoption of any strategy is the achievement of competitive advantage. To achieve competitive advantage a business organization is required to build a steadfast choice about the form of competitive advantage it wants to accomplish and the range of resources within which it would strive to achieve that level. Competitive advantage sought by firms can be classified into two basic types; low cost and differentiation (IFM, n.d.). On the basis of these two competitive advantages Porter has come up with three generic strategies (Porter, 2008, p. 12) namely, cost leadership, differentiation, and focus. The last strategy has two sub categories, â€Å"cost focus and differentiation focus† (IFM, n.d.). These strategies help the firm deliver a better than average performance. Cost leadership Any firm that follows the strategy of cost leadership, targets at becoming the only producer in the entire industry whose cost of p roduction would be lower than all its competitors. The producer seeks to exploit economies of scale and follow competitive pricing (Richardson and Dennis, 2003). Cost leadership strategy is a key to success for several successful companies; one among them is Walmart (Baroto, Abdullah and Wan, 2012). Differentiation Under this strategy the firm concentrates on becoming unique in the products it offers. It does this by identifying certain product dimensions that consumers value the most. The firm develops its production and marketing strategies in such a way that it can satisfy the customers’ demand for those attributes and hence receives premium price for that uniqueness. For example, Apple Computers makes â€Å"differentiation by technology† (Baroto, Abdullah and Wan, 2012, p. 120) to preserve its competitive advantage. Focus The firm selects either a group of segments or a single segment from the industry in which it belongs and optimizes its strategies to serve these segments so well, as to gain competitive advantage over all its competitors. A firm can pursue this by either creating cost advantage in a targeted segment (cost focus) or by developing a differentiation in a targeted segment (differentiation). Tesco follows the focus strategy to blend elements of both differentiation and low cost (Baroto, Abdullah and Wan, 2012). Total Quality Management Total quality management (TQM) is â€Å"an art of management† (Singh, Qureshi and Butt, 2007) that became popular with business organizations in 1980s. Clark (1996) has explained that this management strategy focuses on maintaining quality of in all processes running in an organization; manufacturing, human resource, financial procurements, R&D and administration. Implementation of total quality management provides a framework that guides the organization to select competitive advantages in the face of uncertainty. These competitive advantages become the foundation on which operational deci sions are made regarding the marketplace (Tseng and Lin, 2008). Quality management is an approach that many firms consider the basis for making differentiation from competing firms (Singh, Qureshi and Butt, 2007). The role played by TQM in a firm is that of creating a demanding work environment and also lay down ways to fulfil the demands through team spirit, mutual trust, honesty, open communication and fun. In this framework, changes are appreciated, fear is defeated and resistance towards change is