The term 'strategic advantage', originally from the world of military doctrine, refers to gaining of overall or long-term military advantage. When you hold the strategic advantage and your opponents do not, situations start unfolding in your favour. In the world of business, strategic management has the same significance - when you have one, you can beat your industry rivals.

For a business, keeping a strategic advantage is critical, because it is essential for just everything else a business wants to achieve to keep itself ahead of competition in today's overcrowded market. And for a small business business, needless to say, it could be just like a life-jacket while swimming in crisis.

So, how a business can gain a competitive advantage? To sum up, it derives from an organisation's inbuilt capacity to use its strengths and overcome its weaknesses in order to use opportunities and face threats. The external behaviour helps a business to think 'what to do' while the internal environment helps it to decide 'what it can do'. The key to achieve a strategic advantage for a business lies in the latter.

The elements of the framework required for developing a strategic advantage include the following:

Resources: They are the most important aspects of any business. If the physical, human and organisational resources have characteristics such as they are valuable, not easily accessible, costly to reproduce, and are non-substitutable, then they can help in gaining strategic advantage. If a business is located at a place from where raw materials and machinery are easily accessible, then it can be used as a strategic weapon to compete in the market.

Organisational behaviour: Availability of resources however cannot fully define the capability of an organisation. What matters most is how the resources are used. Some of the essential factors that affect organisational behaviour are the quality of leadership, management philosophy, shared values and culture, organisation politics and use of power. The proper and collective usage of resources and behaviour of a organisation helps forming the strengths and weaknesses of a business.

Strengths and Weaknesses: The strengths and weaknesses occur when organisational resources and behaviour combine. Resources and behaviour helps in determining the strengths and weaknesses which are always present in combined form and never occur in isolation. Strength is the inbuilt capability that a firm can use as a strategic weapon to compete in the market. In a similar manner, weaknesses result as a disadvantage in formation of strategy.

Synergistic effects: When strengths and weaknesses combine, synergistic effects occur. In other words, synergy is the combination of two organisations, two functions, two departments or so on in a particular area. For example, two companies can combine to produce a better quality product. Synergistic effect can occur in various ways within an organisation. For example, in marketing, it may occur when product, pricing, place (distribution) and promotion (4Ps) combine together.

Competencies: Competency is the combination of synergistic effects and special qualities that a business possesses. Unique resources, skilled employees, etc. help a business to stand apart. When various competencies are maintained over a period of time and changed into fine art, core competencies are developed.  When a firm possesses a competency that its competitors do not, such competency is called distinctive competency. Some examples of distinctive competencies include distinctive quality product in a particular attribute, highly specialized product and R&D based competency.

Organisation capability: It is defined as inbuilt capacity of an organisation to use its strengths and overcome its weaknesses in order to use opportunities and face threats. Capability is the sum total of resources and behaviour, strengths and weaknesses, synergistic effects that appear in an organisation, if we talk about organisational capability in terms of attributes. Most strategists believe that organisational capability is the skill and knowledge that its employees possess.

Strategic advantage: Strategic advantages are the consequences of organisational activities that enable an organisation to be successful in terms of financial as well as non-financial parameters such as both profit and reputation. Competitive advantage is a special case of strategic advantage in which there are one or more known competitors against whom rewards or penalties could be measured. So, having profit more than the competitors in the market could be a competitive advantage.  

To sum up, when an organisation adopts various types of resources, it shows a certain type of organisational behaviour. The relationship between the resources and the organisational behaviour leads to strengths and weaknesses. This in turn leads to synergistic effects from which competencies arise. The competencies finally leads to strategic advantage — the ultimate weapon to come out a winner in the war of business.

(Writuparna Kakati can be contacted at writu.kakati@gmail.com)