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IJMBS Vo l . 3, Is s u e 3, Ju l y - Se p t 2013ISSN : 2230-9519 (Online) | ISSN : 2230-2463 (Print)Fundamental Ingredients Underpinning the Success ofBusiness Organizations Towards SustainableCompetitiveness: A Theoretical Review1 Benoit Katula, 2 Headmound Okari Isoe, 3 Ibrahim Moiro Omari1Ph.D Student: Boston University2,3Ph.D Candidate: Jomo Kenyatta University of Agriculture and Technology (JKUAT), Nairobi KenyaAbstractWith myriad opportunities and threats in the current dynamicbusiness environment, organizations are competing to outdo eachother and secure leading positions in their respective industries.This paper made an attempt to bring out common fundamentalcharacteristics of top organizations in various industries thatendow them with a competitive edge above other players intheir respective industries. This review presents theoretical andempirical findings as documented by various management scholarsand researchers in peer reviewed journals and other scholarlypublications in strategic management. From the theoretical andempirical literature gathered, the paper concludes that in thecontemporary business environment, successful and leadingbusiness organizations have invested substantially in technologicalinnovation, human resource development and participation, newproduct development, winning marketing strategies and corporatesocial responsibility.KeywordsBusiness Success, Sustainable Competitiveness, IndustryI. IntroductionAll forms of organizations in both public and private sectorhave been face multiple challenges emanating globalization,liberalization, technological advancements, and changingcustomers’ technological-driven expectations (Das, 1995; Kotlerand Armstrong, 2010; Letangulle and Letting, 2012). Organizationsoperate in a dynamic business environment that is technologicallydriven, globally unbounded, and customer oriented. Thesechallenges, among others, call for extensive search and adoption ofsuitable strategies that can not only ensure growth and survival inthe turbulent environment but also position business organizationsabove competitors in the industry.Environmental forces largely influence competition within anindustry especially those related to technology, economic forcessocial cultural values, market dynamics, products, political andlegal. Business competition become even stiffer and complex ifthe style of business is almost rigid, thereby giving the players alittle chance to diversify and play differently (Stalk et al.; Das,1995).With the advent of liberalization, and entry into the industry ofnew players, competition among the various players has become sostiff that only those companies with the best strategies are able tosurvive and position themselves competitively in the industry.This paper, is an attempt to review and gather the various commonattributes that define best performing business organizations.The paper contends that Leading organizations in most businessindustries are those that have invested in among other factors;technological innovation, human resource development andparticipation, new product development, winning marketingstrategies and corporate social responsibilityII. Guiding Theory and ModelThis review is guided by the Resource-based theory (RBT) init’s analysis of fundamental ingredients underpinning the successof business organizations towards sustainable competiveness.The RBT distinguishes organizations in terms of their strategicand resource endowments and stresses the uniqueness of everyorganization. This approach assumes that an organization canuse superior resources and capabilities to modify the industrystructure and or change the rules of a competitive game (Peteraf,1993). According to Stalk, et al. (1992) the key to success isno longer where a company chooses to compete but how itsunique resources and capabilities dictate strategy and lead tosuccess. The RBT focuses on the internal resources, capabilitiesand core competencies of an organization (Barney, 1991). Thetheory advocates for building strategies on competitiveness anduniqueness of an organization (Peteraf, 1993).Barney (1991) argues that a resource is strategic and thereforelikely to give a company a competitive edge if it contains givenspecific characteristics which include; valuability meaning thecapacity to increase the organizations’ effectiveness and efficiency,when the resource is rare and in high demand, inimitability andsubstitutability (not readily substituted). From the RBT perspective,an organization endowed with or that acquires resource(s) of thestated features stand a high chance to position itself as a leader inits industry of operation and it is most likely to succeed.RBT theory classifies resources into three basic types which include;the tangible resources, intangible resources and organizationalcapabilities which Day (1994) defines as a complex bundle ofskills and collective learning, exercised through organizationalprocesses that ensure superior coordination of functional activitiesfor instance the human capital. All these resources combinedwhen inherent in an organization form the unique capabilitiesthat underpin success and competitiveness for any businessorganization.II. Porter’s Five Forces ModelsStrickland, et all (2010) postulate that the five forces hold the stateof competition in an industry to be a composite of competitivepressures operating in key areas of the overall market. The fiveforces include; Pressures associated with the market maneuveringfor customer patronage that goes on among rival sellers in theindustry, Pressures associated with the threats of new entrants,Pressures from the attempts of companies in other industriesto win buyers over to their own substitute products, Pressuresstemming from supplier bargaining power and suppliers sellercollaboration and finally, Pressures stemming from seller-buyerbargaining power and seller-buyer collaboration.With a clear understanding of where power lies, an organizationcan take advantage of a situation of strength, improve a situation ofweakness, and avoid making wrong moves that may work againsta business organization or disadvantage it against its competitors.Porter’s five forces model can be an important guide in the planningwww.ijmbs.com International Journal of Management & Business Studies 67

IJMBS Vo l . 3, Is s u e 3, Ju l y - Se p t 2013 ISSN : 2230-9519 (Online) | ISSN : 2231-2463 (Print)by top management especially those playing in a competitiveindustry. The five forces framework provides useful insights intothe forces at work within an industry or market environment of acompany and could inform the nature of strategies to be adoptedin order to navigate the competitive environment so as to havean edge over rivals.III. Technological InnovationGlobal Technological development has had a huge impact in theway businesses are conducted. Multiple business strategies havebeen victims of the rapid emergence of what Hill (2010) terms astechnological paradigm shifts. Business organizations have haddifficult times coping with the rapid emergence of technologicallyrelated paradigm shifts, both in terms of strategy formulationand execution, mainly due to the rapid base at which these shiftsoccur. This implies that any organization that aspires to securea leading position in such a turbulent market environment musthave a clear technological innovation strategy.Technological paradigm shifts occur when new technologies comealong that revolutionalize the structure of the industry, dramaticallyalters the nature of competition, and require companies to adoptnew strategies to survive (Hill 2010; Kim and Mauborne,1999). For instance, in Kenya, technological advancements inthe mobile financial services have revolutionalized not only thetelecommunication industry but also the banking sector. Banksand financial institutions that have been slow in embracingmobile money transfer technology have found themselves ata disadvantaged end while first movers gained immensely byadopting mobile money transfer technology.Hill (2010) observes that technological paradigm shifts appearto be more likely to occur in an industry where one, or both, ofthe following conditions are in place. One, when the establishedtechnology in the industry is mature and approaching or at its“natural limit” and second, when “disruptive technology” hasentered the market place and is taking root in niches that are poorlyserved. Technology is a major determinant in the ability to innovateand is viewed both as a major source of competitive advantageand of new product innovation (Gunasekeran at al., 1996).Organizations that are able to combine customer value andtechnological innovation are highly likelyto enjoy sustainablegrowth and profitability (Kim and Mauborne, 1999) and thereforethe variations in performance among players in an industry may beexplained by the variation on the extent of adoption and deploymentof innovative technologically driven products. Utterback andAbernathy, (2005) contend that the primary motivation oftechnological innovation is to assure the survival of the entityand achieving sustainable competitive performance.According to Adam and Farber, (2000), technological innovationin the organizational context, may be linked to performance andgrowth through improvement in efficiency, productivity, quality,competitive positioning and market share among others. Thesefeatures fit to describe top organizations that have been knownto be leaders in their industries.IV. Human Resource Development and ParticipationStorey (2001) refers to human resource development as anapproach to employment management which seeks to achievecompetitive advantage through strategic development of ahighly capable workforce. Reilly and Pfeffer (2000) contendthat the quality of human resource is one of the most essentialdeterminants of organizational success that need to be taken intoconsideration. Quality in this case refers to sum total of skills,68 International Journal of Management & Business Studiesattitudes, capabilities, experiences and other characteristics of thepeople required by a specific task or position (Peng & Litteljohn,2001). These scholars, further note that we do live in a world inwhich knowledge, intellectual capital, rather than physical capitalis increasingly important and we need smart people who can dogreat things to increase productivity, build new products andservices and do so even more quickly.Leading business organizations in various industries are thosethat have strongly subscribed to human resource empowermentand talent management. For instance, effectiveness of strategyimplementation is, at least in part, affected by the quality of peopleinvolved in the process of crafting and deployment of the strategy(Govindarajan, 1989). If an organization’s workforce has limitedcapacity, then the chance of success of such an organization areslim. Such a workforce will not take the lead in developing andnurturing an innovation culture, establishing innovation processand pushing the alignment between innovation strategy andbusiness strategy.Harrington (2006) observes that a high level in total organizationalinvolvement by all cadres of management during strategyimplementation has a positive effect on the level of implementationsuccess. The “who” of strategy implementation at differenthierarchical levels will for instance include top level management,middle level management, and the lower level management allof whose participation determine the success level of strategyimplementation (Heracleous, 2000). Poloski and Vidovic (2007) inasserting the strategic role of human resource in an organization henotes that HRM in a modern organization has two main interrelatedroles which include; to foster the performance of an organization,and to act as a support for achieving competitiveness throughpeople. It is therefore imperative that a leading organization musthave invested in human resource and development and accordedthem space for participation and talent exploitation hence acompetitive advantage over other industry players.V. New Product DevelopmentNew product development is the introduction of original productsor product improvement or modification, through an organization’sresearch and development initiatives (Cooper 2001; Kotler andArmstrong 2010). According to cooper (2001), new productdevelopment is one of the most critical strategies in any competitiveindustry. In the current business environment, organizations haveto deal with a dynamic environment within which innovation andcreativity are vital competencies. Organizations need to keep aconstant flow of new ideas in order to enjoy competitive advantageand sustain customer patronage (Mathisen and Einarsen, 2004).In emphasizing the role of product development as a source ofsurvival and competitive advantage in an industry, Hoyer, etal. (2010) narrates that to grow, it has become necessary fororganizations to evolve new products that reflect their customeror target market.Today’s customer is highly informed and more demandingthan before. Responsiveness and agility to customer need andchange of market conditions have become key determinants ofan organization’s success and call for enhanced capacity for anorganization to introduce new products often (Robertson and Yu,2003). The already stated development of mobile money transferin Kenya illustrates a typical example of new product developmentin which the Mpesa mobile money transfer product of SafaricomCompany received immense popularity in the Kenyan marketsuch that its spread and influence radically changed the rules ofthe. This development has led to the introduction of more newwww.ijmbs.com

ISSN : 2230-9519 (Online) | ISSN : 2230-2463 (Print)products around the mobile money transfer that has kept SafaricomCompany ahead of its peers.VI. Winning Marketing StrategyRobson (1997) defines marketing strategy as a pattern of resourceallocation or decisions made throughout an organization whichrelate to the customer or customer groups to attract and enhance theirloyalty to the company. A proper marketing strategy emanates froman extensive analysis of the market and its environment, customerbuying behavior, competitive activities, and the abilities of themarketing intermediaries (Robson, 1997). According to Robert(2012), organizations are focused on designing various marketingstrategies that can be used in conquering a heavily competitivemarket in order to attain a leadership in the industry.Companies are increasingly turning to their customers as a meansof securing their competitive edge. Therefore, CRM has becomethe mantra for success and developing close and sustainablerelationship is important for any organization the dreams of aleading position in an industry. Some of the main marketingstrategies adopted by leading industry players in different industriesin Kenya include, ingenious product innovation, product mix,product line advertising, promotion, pricing among others.Belch and Belch (1997), also contend that any organizationthat wants to exchange its products or services in the marketplace successfully should have a strategic marketing plan toguide resource allocation and enable it compete favorably. Theyfurther emphasize that an important aspect of marketing strategydevelopment is the search for a competitive advantage which canonly be attained through having quality products that commanda premium price, providing superior services, having the lowestproduction cost and dominating channels of distribution.Customer sustainability is the bloodstream that nourishes everybusiness and leading organizations have mastered the art andinvested significantly in the management of customer. Accordingto Agrawal (2003), service markets need to build up long-termrelationships with their customers by understating the cause behindtheir problems and provide products that provide solutions tothem. With fierce competition in almost every industry, businessplayers must find ways of reducing prices, attract new customerswhile jealously guarding the existing one from existing to otherplayers and find ways of increasing their profits for growth andsurvival.VII. Corporate Social ResponsibilityCSR is a concept in which companies integrate social andenvironmental concerns in their businesses operations and intheir interaction with their stakeholders on a voluntary basis(European Commision’s Directorate – General for Employmentand Social Affairs). Carroll (1979), views CSR as encompassingthe economic, legal, ethical, and discretionary expectations thatsociety has of organizations at a given point in time. There hasbeen a strong debate if CSR has any long term added value tobusiness organizations or if it erodes gain made by businessorganizations to the disadvantage of its stockholder. Antagoniststo CSR mainly argue on the basis that the “business of businessis business”. However, the main weakness of some of thesearguments against CSR is that they all focus on the tension betweenbusiness and society rather than on their interdependence andcomplimentarily.Many organizations according to Porter (2006) cannot make aclose link between their core strategy and the CSR activities. Thisaccording to Porter results to a hodgepodge of uncoordinated CSRIJMBS Vo l . 3, Is s u e 3, Ju l y - Se p t 2013and philanthropic activities disconnected from the company’sstrategy that neither make any meaningful social impact norstrengthen the firms’ long-term competitiveness. Galbreath (2006),argues that most company strategists address what the firms mightand can do as well as what the firm wants to do but they fail tofocus on what a firm oath to do. The oath to do is what should entailCSR. By targeting CSR towards specific stakeholders, the goalis to increase long-term value creation for these stakeholders aswell as for a firms’ financial and reputation position in the marketand in the long run accord the company the desired competitiveadvantage within the industry and beyond.Proponents of CSR have used four arguments to make their case;moral obligation, sustainability, license to operate and reputation.Porter (2006) summarizes that business organizations shouldoperate in ways that secure long-term economic performance byavoiding short term behavior that might be socially detrimentalor environmentally wasteful. An influential opinion advanced byClarkson (1995) argues that the economic and social purpose ofthe corporation is to create and distribute increased wealth andvalue to all its primary stakeholders groups, without favoring onegroup at the expense of the others. Top organizations that havesucceeded are those that have adequately addressed and alignedtheir strategy on what the firm might and can do with what thefirm oath to do.VIII. Discussion and ConclusionThis paper has focused in presenting some of the top ‘trending’fundamental ingredients underpinning the success andcompetitiveness of leading business players. The paper begunby appreciating innumerable inherent opportunities and threatsthat drive and define the current business environment that isdynamic and turbulent.The paper aimed at analyzing important elements that characterizetop organizations in various sectors and what makes theseorganizations to be above other players in their industries. From thediscussion presented, it emerged that key elements that constitutethe basis of competitive advantage of leading organizations are;technological innovation, human resource development andparticipation, new product development, winning marketingstrategy and investing in corporate social responsibility. Theseelements, according to this review are the key ingredients thatendow top performing organizations with not only success and acompetitive advantage but also leading positions in their industries.The paper concludes that the recipe for Successful Businessorganization and leading position in an Industry constitute;Technological Innovation + Human Resource Development andParticipation + New Product Development + Winning MarketingStrategies + Corporate Social Responsibility.References[1] Adam, M., Farber, A., Khallil, T,,"Financing TechnologicalInnovation. Management of Technology II", Institute ofIndustrial Engineers. USA, 2000.[2] Agrawal, L.,"Make a Mistake and Deepen RelationshipMapping Customer Relationships After Service Recovery",New Delhi. Excell Books, 2003.[3] Barney, J.,"Firm Resources and Sustainable CompetitiveAdvantage", Journal of Management, 17(1), 1991.[4] Belch, E., Belch, A.,"Advertising and Promotion", AnIntergrated Marketing Perspective. McGraw Hill Inc.,1997.www.ijmbs.com International Journal of Management & Business Studies 69