1. Department of Economics and Management
Vavuniya Campus of the University Of Jaffna
Sri Lanka
Title of the Assignment:
Identify two organizations which are in same category & critically
discuss the competitive advantages of the organization
Presented by:
Mr.N.RAGULAN
(2008/Bs/20)
Presented to:
Dr.A.Pushpanathan
Date of Submission: June 25, 2013

2. Q1] Identify two organizations which are in same category & critically
discuss competitive advantages of the organization.
Competitive advantage seeks to address some of the criticisms of comparative advantage. Michael Porter
proposed the theory of Competitive advantage in 1985. This theory suggests that states and businesses
should pursue policies that create high-quality goods to sell at high prices in the market. Porter emphasizes
productivity growth as the focus of national strategies. Competitive advantage rests on the notion that cheap
labor is ubiquitous and natural resources are not necessary for a good economy. The other theory,
comparative advantage, can lead countries to specialize in exporting primary goods and raw materials that
trap countries in low-wage economies due to terms of trade. Competitive advantage attempts to correct for
this issue by stressing maximizing scale economies in goods and services that garner premium prices
Competitive advantage occurs when an organization acquires or develops an attribute or combination of
attributes that allows it to outperform its competitors. These attributes can include access to natural
resources, such as high grade ores or inexpensive power, or access to highly trained and skilled personnel
human resources. New technologies such as robotics and information technology can provide competitive
advantage, whether as a part of the product itself, as an advantage to the making of the product, or as a
competitive aid in the business process (for example, better identification and understanding of customers).
Above writings signify competitive advantage as the ability to stay ahead of present or potential
competition, thus superior performance reached through competitive advantage will ensure market
leadership. Also it provides the understanding that resources held by a firm and the business strategy will
have a profound impact on generating competitive advantage. Powell views business strategy as the tool that
manipulates the resources and create competitive advantage, hence, viable business strategy may not be
adequate unless it possess control over unique resources that has the ability to create such a unique
advantage. Summarizing the view points, competitive advantage is a key determinant of superior
performance and it will ensure survival and prominent placing in the market. Superior performance being
the ultimate desired goal of a firm, competitive advantage becomes the foundation highlighting the
significant importance to develop same.
I have selected two organizations under the Motor bike manufacturing industry such as, Bajaj & TVS. The
purpose for what I have selected these particular two industries is, because they are the market leaders at
present in Sri Lanka. They are using competitive advantages to become as the Market leaders in Motorbike
manufacturing. The following facts will show how they use those;
Competitive Strategies/advantages
Cost Leadership Strategy
The goal of Cost Leadership Strategy is to offer products or services at the lowest cost in the industry. The
challenge of this strategy is to earn a suitable profit for the company, rather than operating at a loss and
draining profitability from all market players. Companies such as Wal-Mart succeed with this strategy by
featuring low prices on key items on which customers are price-aware, while selling other merchandise at
less aggressive discounts. Products are to be created at the lowest cost in the industry. A typical example is
to use space in stores for sales and not for storing excess product.
In TVS normally cost of production is lower compared to Bajaj. But there are some differences in the
features that are offered by them via products.TVS marketers normally use cost leadership strategy than the
Bajaj Company. The inventory turnover of the TVS and Bajaj are 34 times & 13 times respectively. From
that also we can ensure that sales of the Bajaj are higher than that of the TVS.

3. Differentiation Strategy
The goal of Differentiation Strategy is to provide a variety of products, services, or features to consumers
that competitors are not yet offering or are unable to offer. This gives a direct advantage to the company
which is able to provide a unique product or service that none of its competitors are able to offer. An
example is Dell which launched mass-customization on computers to fit consumers' need. This allows the
company to make its first product to be the star of its sales.
In the Bajaj Company, there are so many variety of products compared to TVS. So we could be able to
assume here that Bajaj Company uses the differentiation strategy than the TVS. When the customer asks for
certain features that he wishes to have, without differentiation strategy company can’t satisfy the customer.
 Types differential strategy
 Differentiation based on ingredients:
 Differentiation through additional features:
 Differentiation by packaging:
 Differentiation by design:
 Differentiation by positioning:
 A successful differential strategy allows an organization to
 Set a premium price
 Increase unit sales
 Build brand loyalty
 Where to look for differentiation opportunities
 Supply chain
 Research and development
 Production activities
 Marketing, sales and service activities
 Strengths of a Differentiation Strategy
 Customers develop loyalty to the brand
 Brand loyalty acts as an entry barrier
 Organization is better able to fend off threats of substitute products because of brand loyalty
 Reduces bargaining power of large customers since other brands are less attractive
 Seller may be in a better position to resist efforts of suppliers to raise prices
Innovation Strategy
The goal of Innovation Strategy is to leapfrog other market players via the introduction of completely new
or notably better products or services. This strategy is typical of technology start-up companies which often
intend to "disrupt" the existing marketplace, obsoleting the current market entries with a breakthrough

4. product offering. It is harder for more established companies to pursue this strategy because their product
offering has achieved market acceptance. Apple has been a notable example of using this strategy with its
introduction of iPod personal music players, and ipad tablets. Many companies invest heavily in their
research and development department to achieve such statuses with their innovations.
In the motorbike industry Bajaj is more innovative than the TVS. Because, from time to time they introduce
various products with various features. In the case of TVS, their innovations are not sufficient. The research
& development segment of the TVS is less active than the Bajaj. In the case of Bajaj, they release their new
products to the market annually.
Operational Effectiveness Strategy
The goal of Operational Effectiveness as a strategy is to perform internal business activities better than
competitors, making the company easier or more pleasurable to do business with than other market choices.
It improves the characteristics of the company while lowering the time it takes to get the products on the
market with a great start. State Farm Insurance pursues this strategy by promoting their agents as "good
neighbors" who actively help customers.
According to the opinion TVS & Bajaj both are equally using this strategy. Because , both companies are leading in
the market.
.
Q2] Visit restaurant industry & discuss the value chain analysis of the
industry.
The value chain assessment is the process of evaluating the degree of engagement of every actor in a
specific industry from producing the basic raw materials to delivering a final product to the consumer.
The goal of the VCA is to determine where farmers are located along the several value adding opportunities
in the value chain, and how they can improve their income generation activities.
In fruits and vegetables, a value chain begins up stream with the production of goods by individual farmers,
cooperatives or farming corporations, and broadens downstream as the product is transformed or repacked to
be sold either through retailers or be served in restaurants where the final consumer is reached.
Experience has shown in several parts of the world that the vast majority of horticultural entrepreneurs are
not part of a value chain. They continue to join traditional supply chains with a strong focus on cost and
price, and not on value and long term profit. Joining value chains is difficult for them because in most cases,
well organized value chains will require higher levels of coordination, minimum plot sizes to supply agreed
volumes, and higher focus on adding value and differentiation to the products than on non-differentiated
commodities.
Because of this situation, better off farmers (larger, better endowed, better connected to the value chain
actors) are more likely to be part of the value chain philosophy. PFID-F&V's approach takes this reality into
consideration and plans for the long-term involvement of more farmers by opening opportunities with the
most advanced farmers first. The concept is not new as there are several private-sector models around the
world that work this way through out grower schemes. PFID-F&V's innovation concentrates on developing
partnerships that will ultimately facilitate access to the "next in line" after the top tier farmers have entered
the value chain and continue opening the breach for others. The following graph illustrates this dynamics.
According to the restaurant industry we can discuss their value chain analysis as follows:

5. • Inbound logistics
 Activities used to receive, store, and disseminate inputs to a product (materials handling,
warehousing, inventory control, etc.) in the restaurant all the activities which are related to purchasing
vegetables & other ingredients & storing them in the store.
• Operations
 Activities necessary to convert the inputs provided by inbound logistics into final product form
(machining, packaging, assembly, etc.) in the case of restaurant washing the vegetables, cutting them
& cooking them. If there is outlet to sell these foods, preparation of all those fast foods are also can
include under this.
• Outbound logistics
 Activities involved with collecting, storing, and physically distributing the product to customers
(finished goods warehousing, order processing, etc.)Foods delivery process can be taken under this
category.
• Marketing and sales
 Activities completed to provide means through which customers can purchase products and to induce
them to do so (advertising, promotion, distribution channels, etc.)Most of the restaurants don’t have
big marketing division like other firms. But in front of their restaurant normally they put banners
.They put some advertisements in the internet at present.
• Service
01. Procurement
 Activities completed to purchase the inputs needed to produce a firm’s products (raw materials and
supplies, machines, laboratory equipment, etc.)In the restaurant all the records which are in the
written format comes under this category.
• Technological development
 Activities completed to improve a firm’s product and the processes used to manufacture it (process
equipment, basic research, product design, etc) the usage of new methods of cooking, new
machines for cook. using new technologies
• Human resource management
 Activities involved with recruiting, hiring, training, developing, and compensating all personnel,
normally most of the restaurants haven’t their own HR department .Below we can see McDonalds
value chain analysis.