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What Is the Connection between Culture and Competitive Advantage?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 03 November 2016
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The connection between culture and competitive advantage lies in the fact that a strong corporate culture can be channeled by an organization toward the realization of competitive advantage. Also, culture and competitive advantage are connected in the sense that a good corporate culture, such as a good employee welfare package, will inspire employees to be more committed to the goals of an organization. Competitive advantage is used to describe a situation in which a company is able to post profits that exceed those of other companies engaged in a similar type of industry. For instance, a company that produces women’s apparel could use the same resources as other companies that produce similar products and still manage to post more profit than the competition. This is the main connection between culture and competitive advantage since it is one of the factors that could contribute to such a competitive edge.

Corporate culture refers to the type of established norms of behavior in an organization. This may include a factor like the type of attitudes the organization encourages from its employees, such as team players or individual efforts. It may include whether the climate in the organization is casual, semi-casual or rigidly formal. The two most pertinent aspects of corporate culture with regards to competitive advantage include the manner in which the company relates to its employees and the manner in which the company provides for its employees.

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Culture and competitive advantage are connected by the manner in which the company provides for Its employees. A company that takes the welfare of its employees very seriously will naturally inspire more loyalty from the employees than a company that does not. For instance, a company that makes provisions for daycare facilities where parents can keep their young children while they are at work will benefit from such an arrangement in the long run. This type of corporate culture gives the company a competitive advantage since its employees will be more productive by not having to worry about rushing through their jobs so that they can go and pick up their children from the daycare or babysitter.

Companies that are more efficient and productive will have a competitive advantage over the ones that are not as productive. Another manner in which culture and competitive advantage are linked is through the impact of a strong corporate structure on the employees and customers. In a place where the corporate culture is well-defined, everyone knows what is expected of him or her and everything is more coordinated and efficient, which leads to more productivity and reduced costs and waste. For instance, the employees in a production plant with a strong and established corporate culture will know what is expected of them at all times. The supplier and distributor both know their duties, and this seamless efficiency results in reduced costs from which the customers can benefit.

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