Value Creation and Competitive Advantage – Toyota Motor Corporation

An organization is said to possess a competitive advantage over its rivals when the firm maintains profit that is more than average for its industry. Therefore, the goal for most of the businesses strategies in the world is to attain a maintainable competitive advantage. Toyota Motor Corporation has positioned itself in a competitive advantage by influencing its strengths.

Michael Porter (2008) disputed that organization´s strengths fall into two fundamental categories of competitive advantage: cost advantage or differentiation. Since they articulate the organization’s location in the industry as a leader in either differentiation or cost, cost and differentiation advantages get recognized as positional advantages. As a result, Toyota Motor Corporation has been able to create a competitive advantage through utilizing its resources and capabilities to attain lower cost structure or lower differentiated products. Therefore, it has positioned itself in its industry through its preference for low cost or differentiation.

.           An additional vital choice is how extensive or narrow a market segment to target is. Porter (2008) shaped a template with cost advantage, differentiation advantage, and an extensive or narrow spotlight to recognize a set of general plans that an organization can follow to make and maintain a competitive advantage. Therefore, to attain a competitive advantage, an organization have to carry out one or more value creating actions in a way that makes extra overall value than what competitors achieve. Greater value gets made through inferior costs or higher benefits to the customer.

A competitive advantage, therefore, subsists when the organization is capable to distribute the similar benefits as competitors although at an inferior cost (cost advantage) or distribute benefits that are above those of rival products (differentiation advantage). For that reason, a competitive advantage tolerates the organization to create greater value for its consumers and its profits.

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