Learning and Development can create a competitive advantage

 

Learning and Development can create a competitive advantage

Learning and development are vital for business success. The fast-paced and ever-changing business world needs training and development programs to keep up with new challenges.

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. Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. Porter suggested four "generic" business strategies that could be adopted in order to gain competitive advantage. The strategies relate to the extent to which the scope of business activities are narrow versus broad and the extent to which a business seeks to differentiate its products. The four strategies are summarized in the figure below (Eldring, 2009).

Figure 1: (Porter, 1980) 

The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments .By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry (Porter, 1980).

(i)                 Cost Leadership:  There are two main ways of achieving this within a Cost Leadership strategy. They are increasing profits by reducing costs, while charging industry-average prices and increasing market share by charging lower prices, while still making a reasonable profit on each sale. Companies that are successful in achieving Cost Leadership usually have access to the capital needed to invest in technology that will bring costs down, very efficient logistics and a low-cost base (labor, materials, facilities), and a way of sustainably cutting costs below those of other competitors

 

(ii)               Differentiation Leadership: Differentiation involves making products or services different from and more attractive than competitors. To make a success of a Differentiation strategy, organizations need good research, development and innovation, the ability to deliver high-quality products or services, effective sales and marketing, so that the market understands the benefits offered by the differentiated offerings.

 

(iii)             Focus Leadership: Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, develop uniquely low-cost or well-specified products for the market. Because they serve customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers. This makes their particular market segment less attractive to competitors.

Porter’s ultimate goal of Competitive Strategy is to distinguish between successful and unsuccessful companies on behalf of their strategic choice: cost leadership, differentiation, and focus.

The knowledge and skills of an organization's workforce have become increasingly important factors, which contribute to its effectiveness such as performance, competitiveness, and innovation. For organizations to maintain competitive advantage, drive innovation, reduce operational costs, increase profits and achieve organizational goals continuous learning and improvement achieved through training and development must be a strategic consideration of human resources professionals. 

Employees are considered to be the most valuable asset of a company and investing in their training further enhances their capabilities and productivity. There’s a huge amount of benefits that companies gain by focusing on training and development in their strategic business plans. Innovation training generates new ways to thinking, service training leads to better customer service experience, product knowledge training leads to new products and services. Training and development can positively impact for any business and give competitive advantage in the corporate world. Learning and development can create competitive advantage as follows.

(a)    Keeping up with industry changes: Ongoing training can help entire workforce stay aware of what’s happening in the industry around them, therefore keeping one step ahead of the competitors at all times.

 

(b)   Helps you achieve a sustainable competitive advantage: Training and development can play a big role in making a real difference to your competitive advantage. By making sure that employees are constantly progressing, the company automatically gains more value and continues to move forward with a strong position in the market.

 

(c)    Implementing the latest technology: Investing in the latest technologies is essential for business growth. Technology is constantly evolving and companies need to ensure that employees are using the latest technology at its full potential. If applied correctly, it can increase revenue and significantly reduce costs.

(d)    Ensures employee satisfaction and retention: Training has been found to link with improving job satisfaction and employee intention to stay in a company. It has a direct impact on motivation which reduces employee turnover and increases productivity. This leads to more profitability.

 

(e)   Attracts the best employees using learning and development : To attract new talent to the organization want to make sure that candidates are fully aware of any training and development plans organization has set up, since it is a key feature people usually look for during their job search.

 

(f)    Increases productivity: Training and development naturally leads to more more productivity in the workplace. By making sure that necessary training is given to employees to improve their skills, the company is, in turn, ensuring a higher productivity rate. Well-trained employees show both quality and quantity in performance leading to less wastage of time, resources and money.

How Unilever develop leadership skills of their managers and how this helps to create competitive advantage

Today, Unilever is one of the world leaders in production of FMCG goods. The company products are sold to more than 170 countries with 160 million purchase units worldwide using a Unilever product, and on any given day over two billion customers enjoy the company brands.

Unilever products are broken down into 4 product categories: personal care products, household maintenance products, food products, and refreshment. Personal care products category covers antiperspirants, skin care products, hair care products, and oral care products. This category includes Dove, Lux, Rexona, Sunsilk, Axe, Close Up, and other brands. Unilever household maintenance products category comprises softeners, washing powders and detergents, soaps, and dish washing and cleansing agents. In this respect famous brands are Surf, Comfort, Radiant and Sunlight. Food products segment consists of soups, sauces, snacks, mayonnaise, salad dressings, margarine, and spreads. Well-known brands in this category comprise Knorr, Blue Band, Rama, Hellmann’s and Amora. Refreshment category comprises ice cream, tea-based cold beverages, weight loss products, and vitamin enriched staple food products sold in emerging markets. The category brands sold worldwide are Heart brand, Lipton, Slim-Fast, Becel, and Flora.

Unilever pays particular attention to emerging markets as they have been demonstrating the stable sales growth for over 20 years. Unilever sales in 13 emerging countries, and the sales growth in these countries outpaces the total corporate sales growth. The company focuses on implementing innovations and creating new products in all consumer segments. Unilever’s approach is that of open innovation, which helps to source new ideas all over the world. In 2009 the company announced a new R&D Genesis program that provides for a long-term streamlining of new ideas. The innovational pyramid-shaped Lipton Yellow Label tea bags were introduced to the market recently. These unique formed bags preserve the taste of fresh tea leaves. Another successful product is Rexona for Women deodorant that combats body odor even during active movements. The high efficiency of R&D programs is proved with annual registration of 250 to 350 new patents in the corresponding industry fields. The top 25 brands from Food and Personal Care categories generate as much as 70 % of the company’s revenues. As above Unilever use differentiation leadership to making products or services different from and more attractive than competitors.

References

 

Eldring, J. (2009) Porter´s (1980) Generic Strategies, Performance and Risk. Hamburg: Diplomica Verlag.

 

Mahmoud, O (2019), Applying Porter’s Theory in Competitive Advantage of Nations (Case of Palestine) [Online]

https://www.researchgate.net/publication/333093116_Applying_Porter's_Theory_in_Competitive_Advantage_of_Nations_Case_of_Palestine [accessed on 2022.04.27]

 

Porter, M.E. (1990) The Competitive Advantage of Nations, issue of Harvard Business Review. [Online] https://hbr.org/1990/03/the-competitive-advantage-of-nations

[Accessed on 2022.04.26]

 

Tadwrera, F. (2010) Marketing Strategy, Competitiveness, Branding, Positioning. Deutschland : LAP LAMBERT Academic Publishing