Chambers, Craig Stephen
(2007)
An Assessment of "Sustainable Competitive Advantage" for Artex Limited, within the UK DIY Multiple Market Sector.
[Dissertation (University of Nottingham only)]
(Unpublished)
Abstract
Synopsis
This dissertation critically examines the business of Artex Limited and the industry that it operates within, in the context of serving the UK DIY multiple market, a sector that the company is highly reliant on from a turnover and profit perspective. Through the practical application of a number of strategic assessment frameworks, and in conjunction with a study of the relevant literature, the principle objective is to test for empirical evidence of competitive advantage within the Artex business. To set the overall context for the reader an overview of the business is provided, including the key market sectors that it operates in. This is followed by a more detailed review of the DIY multiple market in the UK, the relevant sector for the purposes of this dissertation.
The literature review examines the academic debate surrounding the concepts of �������¢��â����â�¬��â������competitive advantage�������¢��â����â�¬��â����â�¢, �������¢��â����â�¬��â������industrial organisation economics�������¢��â����â�¬��â����â�¢ �������¢��â����â�¬��â����â�� centred particularly around the �������¢��â����â�¬��â������structure-conduct-performance paradigm�������¢��â����â�¬��â����â�¢, the �������¢��â����â�¬��â������resource based view�������¢��â����â�¬��â����â�¢, �������¢��â����â�¬��â������five forces�������¢��â����â�¬��â����â�¢ and �������¢��â����â�¬��â������SWOT�������¢��â����â�¬��â����â�¢, defining these concepts within the boundaries of the dissertation. Given that the dissertation is focused on the practical application of the theory and the theoretical frameworks these reviews are merely intended to provide a brief overview into the respective academic areas, as there exists a multitude of research into each one in its own right.
The research against the key frameworks was conducted over a period of days using the executive team from the business. This facilitated a truly cross-functional contribution to the research and allowed for different personal perspectives and opinions to be voiced and considered. Utilising this methodology also had the advantage of bringing everyone in the executive team up to the same level of understanding and knowledge, improving their abilities to not only contribute to the strategic planning of the business but also to communicate with clarity and clear direction within their respective functions.
Collating the �������¢��â����â�¬��â������raw data�������¢��â����â�¬��â����â�¢ in this way made possible the examination of five key areas, critical to the research project; a distilling of the findings in such a way as to assist management in determining sources of competitive advantage for the business, a compare and contrast of the different strategic perspectives used, an assessment on their usefulness for the business practitioner, consideration of the key areas that provide (or have the potential to provide) competitive advantage and finally to provide strategic recommendations to management aimed at improving the sustainability of any competitive advantage.
Synthesising the findings from the raw data proved invaluable in terms of providing insights for management into sources of competitive advantage. From a reading of the initial raw data one could be forgiven for deducing a fairly pessimistic view of the future of the firm. However opening up the debate and exploring critical areas in more detail, exposes the sources (or potential sources), of advantage for the practitioner. For Artex these include the multi-drop nationwide distribution capability, the broad product range, branding, the link with the sister company British Gypsum and the reputation it holds within the DIY market sector. It is extremely interesting that the research and analysis not only bought out these factors within their own right it also exemplified and emphasised the intrinsic link between them. In this way it demonstrated that whilst each element could provide a source of advantage, combined together in the right way the competitive advantage became more sustainable, as entry barriers were strengthened, the offer became more inimitable and substitutability becomes increasingly more difficult.
The compare and contrast of the different perspectives offered by the frameworks used, also provided useful insights for the practitioner. It is instructive to note that despite a number of fundamental differences being raised, particularly between the relative strengths and weaknesses of the frameworks, no major contradictions or substantial differences came through in the findings themselves. It was however clear that from a practitioner�������¢��â����â�¬��â����â�¢s viewpoint the use of more than one framework in any strategic assessment is of paramount importance. This stems from the fact that each framework does have distinct characteristics, that then through their application to a �������¢��â����â�¬��â������real-life�������¢��â����â�¬��â����â�¢ situation, do draw out alternative viewpoints and do cause the practitioner to reflect and consider situations and findings from different angles. The clear deduction from this is that when findings and options are considered from a number of different perspectives the ultimate analysis and conclusions are better informed and therefore more likely to withstand the test of practical implementation.
Having finalised the research for each of the four frameworks, two specific features became very evident. Firstly that none of the points raised within any of the frameworks were considered from the customer�������¢��â����â�¬��â����â�¢s perspective, in that critical examination of how the customer may value or rate certain resources or relative strengths for example, simply did not come through. This may have been a matter of how the material was understood or applied by the research team in this instance but it is a major area for consideration for any future practitioner. This led the team to also conduct a key success factor analysis against its competitors which not only looked at factors assessed to be important to the customer base but also allowed the company to score itself vis-����������â����� -vis its competitors. This then facilitates benchmarking and provides a tool to help drive change in specific areas of the business, (arguably communication of this sort of analysis to all levels of personnel is easier, in that the concept is easier to grasp and the score provides a mental anchoring for improvement). The second key feature from the findings was that management were left with no clear action plan for taking forward the specific areas identified. To address this, the McKinsey 7S Framework was adapted to provide a structure for the completion of a detailed strategic action plan. Again for any future practitioner this is a crucial weakness that must be avoided. Stopping at the analysis itself is fine for an academic assessment but it does not provide a tool for effective strategic planning or indeed for the practical implementation of the findings.
In order to promote the sustainability of the identified sources for advantage a number of management recommendations are made These centre around strengthening the total supply chain in the company, (particularly at the haulier and personnel levels), tackling the lack of technical skills and using this as a backdrop to the implementation of a major drive in new product development, giving greater consideration the group perspective from a profitability viewpoint and finally considering further the possibilities offered up through now being a part of the Saint-Gobain empire. Suggestions for further examination and consideration are also provided to assist further with the development of the strategic plan.
In conclusion carrying out the research in the prescribed method achieved many things; it has raised the consciousness and knowledge of the executive team, it has led to the identification of sources for competitive advantage, which in turn facilitated the development of a detailed action plan. It has allowed different perspectives to be considered and as a result has broadened the debate from the typical planning processes used in the past. This can only provide a more robust strategy. An unexpected benefit is that it has led to improved communication as to the company direction within all of the business functions, boosting overall morale and (although still early days) improving staff retention levels. The business has a number of areas to develop to help build a sustainable competitive advantage, considerable effort and focus will be required by the executive team to deliver on this but without doubt the company is now better placed to do so as a result of this work.
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