 “A firm gains sustainable competitive advantage from the unique resources it acquired in

the past”. Using examples from the Canon case study, discuss if this statement is correct.
The SWOT (Strength, Weaknesses, Opportunities, and Threats)only focuses on importance
of external and internal conditions of competitive advantage. This deficiency is addressed
through VRIO framework of Barney under resource-based view. According to Barney
(1995), ’A firm is considered to have competitive advantage when adopting a value creating
strategy that is not being introduced concurrently by existing or future rivals’. Therefore,
sustainable competitive advantage is gained through four questions i.e. value, rareness,
imitability and organization.
The company has competitive advantage while implementing value creating strategy. When
this competitive advantage cannot be copied by the competitors it becomes sustainable
competitive advantage. Resource based view emphasizes on firms in organizations internal
attributes i.e. capabilities and resources which created competitive advantage in market. In
the case of Canon, even though Xerox's monopoly on PPC dominated the market, Canon
has produced its popularity and surpassed Xerox.
The major contributor or core competencies for the success of Canon is marketing,
manufacturing and technology.
Technology: Canon had previous technological knowledge of optics technology for high
end camera, electronic calculator, which created technological values in the company. It
also developed new expertise in microelectronics-transistors and diodes in a compact desk
model machine. Canon also used decentralized R&D and each production division has its
own manufacturing plant, carried out by cross-functional teams. The complex R&D system
accounts for 90% for company’s invention which is both valuable and rare, and inimitable
as well. Canon also uses technology transfers and joint ventures for saving both resources
and time. Technology transfers and joint ventures are often used in Canon for saving both
resources and time. These efforts are helping Canon to keep up in the rapid developing
world. The reputation of Canon relies on its ability to rapidly sell the groundbreaking
products. Therefore the skilled R&D workers became coordinated and delegated, joint
partnerships and exchange were used, and the cross-functional system minimized market
time, thus gaining permanent competitive advantages.
Marketing: Elective marketing is one of the core competence of Canon as it has created
strong dealer network in United States which supports both sales, service and direct selling
as well. Canon also built relationship with dealers through training, social outing and sales
 incentive program. Their distributor network and owned distribution divisions were
important to Canon in recognizing and responding to customer demands and challenges
promptly. The network channel is rare and inimitable as exclusive relationship costs Canon
trust and time to build. Canon along with the strong network channel also invested hugely
in advertising for creating the brand image. The barrier of cost that is 20% of price sales
which is huge and other firms cannot afford was responsible for rareness of this attribute.
The marketing competence of Canon is exclusively rare and valuable which gave Canon
temporary competitive advantage.
 Manufacturing: The third and most important competence of Canon is high quality
manufacturing in relatively low cost. The production system was run under the key
philosophy that strongly emphasized tight inventory management through a stable
production planning process, careful material planning close supplier relationships, and
adherence to the Kanban system of inventory movement. The organizational culture of
workforce in Canon is very empowering which makes the labor feel responsible for both
success and failure of products. This organizational culture is rare which increased both
efficiency and effectiveness in the workplace. Canon chose to backward integrate only on
parts with unique technologies, while developed long-term relationship with its suppliers
for other parts and retained two sources for most parts. There is commonality between the
models in Canon which led to high quality and low manufacturing cost which proved to be
valuable in the organization. The strategy of Canon helped in gaining economies of sacle in
market. Moreover, the success of Canon is based on empowered workers as the potential
workforce in Canon were in fully utilized. Therefore, manufacturing can be called as one of
the core competencies of Canon as it gives sustainable competitive advantage.
The research-based approach explores a company's potential to gain sustainable
competitive revenue from investments and resources such as government resources,
dynamic capabilities and expertise. Canon was able to use core competences to "build
service out of the company," while replacing the traditional core competences of Xerox
with centralized high-volume copying and extensive networking. The reliability of the
company's strategic capital and the problem of competitive sustainability in response to
rapidly evolving market conditions. Therefore, technology, manufacturing and marketing
are three core competencies of Canon which gave the organization sustainable competitive
advantage.
Reference:
 Barney, J.B. (1995). Looking inside for competitive advantage. Academy of Management
Perspectives, 9(4), pp.49–61.

 Using Porter’s (1996, 2014) concepts of value proposition and fit, critically assess how
addition of new Mint service will impact JetBlue’s competitive advantage.
According to Porter, the choice of a specific position can not guarantee a sustainable
advantage simply because competitors may emulate one of two desirable positions, i.e. a
competitors can prefer to reposition themselves with the higher performer and a
competitor can seek to balance the advantages of a competitive position while retaining
their current position.
Therefore, trade-offs with other positions are required in order for a strategic role to be
sustainable. Trade-offs simply means something requires less than other thing. This means
that as a company recognizes what it has to do to supplement its core activities, it also has
to figure out what not to do at the same time so that it doesn't get lost in the middle.
Trade-offs occur when activities are incompatible and arise for three reasons:

 A business known for its value may be misleading consumers, or damaging its own image
by delivering a different kind of value or attempting to offer at the same time two
contradictory products.

 Trade-offs emerge from business itself. Various positions require different product sizes,
different equipment, different actions of staff, various skills and various systems of
management. In general, if an operation is over or over built, its value will be lost.

 Trade-offs occurs as a result of control constraint and internal coordination. Management

In addition, trade-offs provide an option and protect the company from repositioning and
straddling. Therefore, strategy can also be described as competitive trade-offs. The whole
essence of the strategy is choosing what not to do.
Competitive advantage is a combination of the creation of unique value proposition for a
specific consumer and prioritization of a set of critical activities and aligning them with the
core beliefs or value chain of the business. This makes it important to understand how
activities should align or fit into the existing value chain of the business.
First order fit: The simple consistency between every function and the strategy overall is
called first order fit. The consistency makes sure that the cumulated competitive activities
do not cancel each other out.
Second-order fit: It occurs when activities are reinforcing.

Third-order fit: Third order of fit means the activities they do from marketing to operations
to how people perceive.

Essentially, the first order of fit is when you ask what are the items they are doing from the
value chain activities that make you understand the role that they are implementing. The
second order fits questions whether they compliment one another or not and in the case of
airlines it might be using the same type of aircraft, P2P versions, issuing seats of the same
size, etc. For example, there are other aspects in the case of JetBlue that do not
complement one another. The airline claims that they are a low-cost airline, but they do
have bigger legrooms and multimedia. If you just want to be cheap, you have to tradeoff
something. You can also see something complimenting one another, however. Another of
these is the flight time and landing time control program that co-ordinates and permits the
plane to remain in the air longer. The longer the aircraft flies, the more cash the company
makes.
By following the strategy of "trade off choices and Fit that Porter (1996) asserts is key,
JetBlue new Mint class offers a new standards on what flyers can expect from an
economical carrier. With JetBlue offering amenities that give flyers a high-class travel
experience at low-cost rates, they will gain the competitive advantage in the industry.
In order to compete with JetBlue, competitors will have lower their inflated prices and
increase the value of amenities offered to the customers. With this move, JetBlue changes
the landscape of the industry and expands their dedicated customer base. In addition to
JetBlue turning their airlines into and industry leader, they have had a positive impact on
their customers which creates trust and loyalty.

In following the key to strategy asserted by Porter (1996), JetBlue offered high-class service
while making trade-offs to ensure that their competitors could offer the overall experience
 they could. The decision to make trade-offs that would benefit the customer by offering top
of the line amenities at a low-cost prices gives JetBlue the completive edge.

Reference:

Porter, M.E. (2017). What Is Strategy? [online] Harvard Business Review. Available at:

 Porter and Kramer (2006) states that effective CSR initiatives occur when shared value is
created. Critically consider if Esquel’s approach to CSR meets this requirement.
According to Porter and Kramer each organization should be able to establish its shared
value by linking social/national issues and business activities when conducting operations in
company. Here, shared value typically focuses on organizational leader for maximizing
competitive value by solving social problems in new market, customers etc. On the other
hand Corporate Social Responsibility is how company manages the business processes for
gaining positive impact in the society. But as the time has passed the concept of CSR has
evolved and CSR is more than philanthropy, cost etc. which in future can generate
opportunity and competitive advantage for the organizations.
CSR is defined in four terms by Porter and Kramer which includes reputation, sustainability,
moral obligation and license to operate. These four terms have common weakness that
constantly focuses on building tension between society and businesses rather than just
individuals. Furthermore, these terms does not offer guidance for making meaningful social
impact or build up organization’s long term competitiveness.
Linking to the Esquel’s case, the company Esquel is one of the world’s renowned and
leading manufacturer of premium quality of cotton shirts. The company's primary goal is to
offer positive changes in society after the financial success. The effort taken by the
organization to protect the environment, donations to non-privileged and catastrophe
prone countries, donations to local schools and agricultural collaboration will prove the
claims.
As the idea of moral obligation and sustainability developed within the organization, triple
bottom line approach was adopted by the firm. The triple bottom line approach is a
philosophy which promotes assessment of overall business on three areas i.e. Profit, People
and Planet. In TBL approach ‘people’ involves workforce that is involved in the organization
and the people of where the company is doing its business. The second area of triple
bottom line indicates that the firm as a whole tries to reduce the ecological footprint of
their organization by reducing the waste effectively, managing natural resources more
efficiently and investing heavily in renewable energy as well. The triple bottom line
approach is used by all governmental, nongovernmental entities along with the businesses
as well. But there are also challenges in triple bottom line approaches including finding
data, policy’s contribution to sustainability and calculating the project.
Esquel 's CSR initiative went above communities standards. For example, the contribution
of Esquel into the generic social issues was promoting HIV/AIDS education in Xinjiang and
Gaoming. Furthermore, Esquel also invested in wastewater treatment facility for preserving
the local ecosystem for mitigating the negative impacts. In addition, Esquel also has
invested in technology for providing better and safer working conditions for factory workers
and also collecting and reusing cotton fibre for improving air and product quality in order to
transform it value chain into benefits. Esquel also housed its worker in above average
conditions like providing, quality foods, libraries and gyms for attracting even more
employees which further benefit the organization. The organization as a whole resolved
accommodation for migrant workers for creating better working environment for them. It
also built its own low-emission coal-fired power station which provided reliable power
supply for production and also supplied excess power to local community.
In the case study of Esquel there are two type of CSR activities i.e. Responsive and Strategic
CSR. The company uses competitive advantage in order to improve society and improve
the competitive context in strategic CSR. On the other hand, following responsive CSR, it
becomes good citizen who reduces harm in society due to actions in value chain. Although
model of Porter and Kramer has many benefits but there are also certain criticism in it like
it ignores deep tension between economic and social goals. Furthermore, there are also
shallow conception of organizations role in society.
The success of company may explain in Esquel case by its ability to align its business goals
strategically with respect to CSR and harmonizing company decision with social factors that
establish mutual interest. Overshadowing the economic and social benefit of Esquel, the
corporate social responsibility policy is anticipated. This has evolved from risk prevention to
means of improving business policy and fostering social conditions. Esquel effectively
achieved the triple bottom line concept became a profitable business and increased the
profitability of businesses while at the same time contributing to economic, social and
environmental conditions.
Reference:
 Kramer, M.R. and Porter, M.E. (2015). Strategy and Society: The Link Between Competitive
Advantage and Corporate Social Responsibility. [online] Harvard Business Review. Available
at: https://hbr.org/2006/12/strategy-and-society-the-link-between-competitive-advantage-
and-corporate-social-responsibility [Accessed 6 Aug. 2020].