Innovation and sustainable competitive advantage - a study: Wipro Limited

Abstract

Competitive advantage is what defines the success of a business. Competitive advantage is the lifeline of any business. The nation in which a company operates, industry the company is in and the resources and capabilities and its proper management of the company leads to its competitive advantage. The three areas where a company can gain competitive advantage are - cost leadership, differentiation and focus. The cost leadership, where the company has a structure and process that enables it to produce a value proposition far below its competitors. Differentiation can be in many forms, like constantly introducing new product, building and leveraging on brands etc - basically the company's products and services are perceived by the customer to provide a better value proposition than Its competitors. Competitive advantage is gained by managing the four building blocks - efficiency, quality, innovation and customer responsiveness, which are the sources of competitive advantage. Organizations need to build strengths in these areas - through functionallevel, business-level and corporate-level strategy. Efficiency, quality and customer responsiveness can be easily quantifiable and risk associated with them can be managed. Innovation is more of an intangible one, the risk associated with that is not easily quantifiable and hence it is tough to manage. Also, innovation is more inclined towards the culture, people and risk taking abilities of management. When a company builds its competitive advantage on innovation and successfully sustains it, the rewards are high and also it forms a foundation for its long-term survival. Service is an intangible value proposition. Management of innovation in a service business is all the more difficult. The sources of competitive advantage-shift away from economic drivers, such as economies of scale, economies of scope, large size firms to new strategies and organization designs based on creating new sources of KNOWLEDGE and IDEAS to develop breakthrough products and services to customers almost immediately.