Assignment #3

Competitive Advantage

In order for any business to sustain, it has to learn how to deal with the tornado of competitiveness. The organization’s management might succeed in defining the foundation of competitive advantage which are the resources, capabilities, and core competencies. But, the ability of managing any competitive related issue requires the organization to acquire sufficient effective knowledge. More importantly, knowing how to use the acquired knowledge can be the most challenging issue.

The ability to manage or define the business resources cannot be enough by itself. In fact, resources (tangible and intangible) by itself cannot yield a competitive advantage. Why? That is because the resources are bundled to create organizational capabilities. In turn, capabilities are the source of a firm’s core competencies, which are the basis of competitive advantages. Consequently, the need to know what kind of knowledge is required and needed and how to manage this knowledge is a quite critical issue. Any organization can hire someone who has acquired enough knowledge to design an effective management system to manage the organization; but the need to know how his or her knowledge can be shared required more or different type of knowledge. Thus, the term of “social ecology” was determined to help any company to maintain an effective knowledge framework.

It is obvious that knowledge is based on the quantity and quality of information collected, processed, and generated. Studies had asserted that knowledge management rely on the social ecology of the company more what it does on the information. This fact was justified by referring the term of social ecology to the social system that clarifies how the employees operate the information or their knowledge. Gupta and Govindarajan in their article “Lessons From Nucor Steel” stated that “the determinants of social ecology are culture, structure, information systems, reward systems, processes, people and leadership”.

We all agree that the information systems playing the dominant role to communicate all those determinants. This obvious because, nowadays, the technology is responsible to process people’s activities, record their performance, matching their performance with the rewarding system, and report the results to the leaders of the organization.

Nucor, succeeded in analyzing its social ecology and became the most innovative and fastest growing steel company in during the years of 90s, 80, and 70s. GE also has been known as the first or second in market value added. As Nucor focused on the human capital and its relationship with the knowledge and how that knowledge can be increased, transformed and shared, GE had maintain the same level of successful. While Nucor concentrated its efforts on superior human capital, GE also established its works equation to be:

We look at what the world needs

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A belief in a better way

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A relentless drive to invent and build things that matter

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A world that works better

Will be continued ...