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Competitive Advantage

Companies are  permanently seeking for success factors which enable the realization of longlasting returns. When establishing  these key success factors, companies often choose one of two possibilities: market-orientation or competence-orientation.

The choice for market-orientation is comprehensible since it was frequently proven that successful companies possess a profound knowledge of their markets in general and especially of their customers. But it was just as well frequently proven that a company’s resources also have a key impact on its success.

Resources are split up in tangible as well as intangible assets, to which among others we count corporate reputation and image, brands, customer relationships, corporate culture, organizational communications, employees potential regarding innovations and ideas, entrepreneurial capital as well as property rights such as (utility) patents. The quest for and the development of success factors can therefore result primarily from a market- or resource-orientation. A concentration on only one of these two strategies will, frankly speaking, lead to a dead-end: Either, a company forgets what it is able to achieve due to a exaggerated market-orientation or it is offering products that are too complex and therefore hardly demanded.

Hence, a management’s core challenge is to effectively combine both views – a profound understanding of the market with a changing system of competences. Thus, the research area „competitive advantage” covers the part „management“ in our institute’s name. Research topics in this area are:

Long-Term Planning:

In the DFG-project „scenarios in B2C e-commerce” we develop new methods of scenario-analysis.

Scenarios are for a long time now an accepted tool in the field of strategic planning. It enables the structuring of strategic communication for imaginable outcomes of the future. Thereby we explicitly highlight the interrelations between a company and its market.

Intangible Assets:

Due to the rising sophistication and comparableness of products and services and the increasing globalisation of different markets, intangible assets are increasingly put in the spotlight of science and practice since they promise a high potential of differentiation.

In addition, it can be stated that material and financial resources are fully or at least partially used up in the course of time, while intangible assets can even increase their value. Typical and in the relevant literature mentioned intangible assets were already explained above.

Especially corporate reputation is a main focus of our research since its importance is widely accepted but has not been entirely explored.

The Institute for Market-based Management breaks new ground in corporate reputation measurement including cognitive and affective constructs. Furthermore the relevant data is not only collected in the body of experts but also in the general public.

Above all, we analyse the kind of existing interrelation between corporate reputation and the final business-related objective (in our view, this can only be profit maximization). This way we can for example show that assuming social responsibility (heavily discussed under the keyword corporate social responsibility) is no end in itself, but rather has a financial effect (via growing reputation).

A similar statement can be made regarding corporate culture which is an important success factor in the case of mergers. More than half of all mergers & acquisitions do not live up to expectations and must therefore be characterised as failed. Besides the “hard” factors such as inflated purchase prices, the overestimation of synergy effects and insufficient analysis of the partners before the takeover, “soft” factors such as differences in corporate cultures are considered as reasons for failure, too.

The consideration of cultural factors failed so far, because no adequate tool had been developed to measure corporate culture.

The Institute for Market-based Management has developed such a reliable and valid measurement tool, which allows to detect and also quantify cultural differences between partner firms. With it, adequate methods can be derived in order to reduce dissonances in the phase of integration and therefore raise the success probability of a transaction.

In addition, we also concentrate on brands, particularly on brand equity and on the development of brand identities. In research and practice there are three types of measuring brand equity und its influencing factors:

  • finance-oriented approaches,
  • behavioral-oriented approaches,
  • and  hybrid forms.

All these approaches have their right to exist. However on the one hand, there are huge differences between each of the scoring models, and on the other hand the brand equity’s influencing factors have not been yet sufficiently identified in order to give clear recommendations for action.

That is why in various projects we concentrate our work on the following topics: the interrelation of e-commerce-activities and brand equity, the measurement of internal brand images and the interrelation between brand strength and corporate reputation.

Find out more about competitive advantages in the related institute's publications [German].