Knowledge Management in Competitive Advantage

association focusing in Competitive gainIntroductionA partnerships friendship focus strategy should reflect its agonistical strategy how it creates value for customers how that value supports an economic model and how the companys people pay off on the value and the economics. Also, belligerent strategy must(prenominal) drive friendship charge strategy. (Civi, 2000)Competitive strategy is described by Johnson et al (2008) as a squiffys focus on how to compete successfully in a market. The break quote directs this essay to look at four beas intimacy, experience guidance, establishment and sciences. The essay aims to display the interdependence of these issues, and demonstrate how they abidance a firms war-ridden strategy.GlaxoSmithKline GSK is one of the leaders in the pharmaceutic industry, commanding a seven per cent share of the worlds pharmaceutical market (GlaxoSmithKline, 2009). GSKs mission is to jump innovational medicines and overlaps that help milli ons of people around the world. As a company with a firm foundation in science, GSK have a wizardry for research and a track record of turning their research into originful, marketable drugs. Every hour GSK spends more than 300,000 on research and development (GlaxoSmithKline, 2009). Currently, a prevailing topic in the pharmaceutical industry is the acquisition of itsy-bitsy biotechnology firms by the big pharmaceutical companies for their experience (The economic expert, 2009). Innovation and acquisition are, therefore, fundamental to GSKs competitive strategy. For these reasons GSK is an ideal washstanddidate as a rootage to the discussion of this essay.KnowledgeAt the strategic level the organization demand to be able to analyze and plan its business in wrong of the companionship it currently has and the companionship it needs for future business processes. (Civi, 2000). accord to Civi (2000) the further sustainable payoff of an organization is what people know and what they do with it. The most crucial knowledge is that which is tacit. As Hamel (1991) states, tacit knowledge is exceedingly personal, and hard to plantalize. This makes it touchy to share with others and an elementary part of a firms competitive strategy, and complements Civis view that knowledge is needed for future business processes. Based on this, knowledge is the most important resource a company has. The resource Based View RBV of the firm complements strategy, and is a determinant of competitive advantage (Porter, 1979). RBV assumes that the firm is a bundle of resources which are heterogeneously distributed. Researchers have theorized that when firms have resources that are valuable, rare, inimitable and non-substitutable, they undersurface achieve prolong competitive advantage by implementing fresh value creating strategies which cannot be intimately duplicated by competitors (Barney, 1991). This belief colligate directly back to our opening quote regarding val ue creation, and manifests how knowledge can be exploited and can shape the strategy of the firm. It allows managers and others to make believe untried thinking in the firm, and is a particularly crucial cap top executive in the pharmaceutical industry (Helfat, 1997).Knowledge managementA goal of GSK is to build a skill organization by leveraging their knowledge. According to accompany (1997) GSK looks to achieve their goals by dispense in spite of appearanceg innovative medicines to the market place and building result competences for the future by means of acquisition. This supports the argument that knowledge management plays a material office in shaping the competitive strategy of GSK by means of creative activity and acquisition.Unlike tangible assets, knowledge does not diminish in value, and by means of its social function as architect shapes the competitive strategy and competencies of the firm, it therefore requires alert management. Knowledge management is a business and institutional process through which firms create knowledge, as (Daveport Prusak, 1998) articulate knowledge management is a wandering mix of framed experience, values, and contextual information and expert insight that provides a framework for evaluating and incorporating parvenue experiences and information. Having come to recognition in the beforehand(predicate) 1990s, knowledge management was adopted by Glaxo Wellcome in 1997 when it launched a fourth-year Executive Programme whereby it united 300 of its executives. Its headings were to share learning across boundaries, build innovative networks and to inspire entrepreneurial initiatives to stimulate business yield. As (Chase, 1997) stated Glaxo Wellcome is rapidly building its knowledge infrastructure learning from materialization and review benchmarking informally and externally and creating kinetic adaptive systems which respond to change. This exemplifies the usance of knowledge management in compet itive strategy. It is further supported by Eisenhardt and Martin (2000) who describe strategic decision making as a dynamic capability in which managers pool their various functional, business and personal expertness to make the choices that shape the major strategic moves of the firm.As a resource, knowledge is considered as multi faceted, and is an essential starting point for the embodiment of knowledge inwardly organizations, and their overall powerful subroutine of knowledge management (McAdam McCreedy, 1999). The ultimate objective of knowledge management is indeed its use, wherein use is the commercial value for the customer, and is easily attributable to innovation (Wilkinson Wilmott, 1994).InnovationInnovation involves the conversion of upstart knowledge into a peeled product, process or service and the putting of this new product, process or service into use, either by the marketplace or other methods of delivery (Johnson, Scholes, Whittington, 2008).In the context of intense global rival and the continuously increasing pace of technological development, innovation is considered as obligatory for survival in such(prenominal) a dynamic market surround (Nonaka Kenney, 1991). In this context, more than ever, companies are forced to renew their product portfolio. only when with new products can they sustain their competitive position, and linking back to knowledge management, numerous researchers believe that tacit knowledge forms the foundation for building a sustainable competitive advantage (Seidler-de Alwis Hartmann, 2008). Jean-Pierre Garnier realized that without huge innovation the company would be at risk from competition and be unable to sustain its market share. Garniers competitive strategy revolutionized GSKs drug discovery and innovation. He commissioned trinity new drug discovery factories in Madrid, the UK and Pennsylvania, wooing $270 million. Each daytime these factories conduct over 300,000 tests, and have paved the way to speedier drug discovery, providing GSK with the ability to produce a drug in just 3 long time half the industry average (Anon, 2004). As a result, in February 2009 GSK had 149 products in its pipeline, more than double the number of rival Merck who had just 74 (GlaxoSmithKline, 2009). This demonstrates the role of knowledge management in creating innovative capabilities, and highlights competitive advantage.Innovation is a key aspect of competitive strategy, and offers the direction for growth. One strategy use by GSK is open innovation. As (Johnson, Scholes, Whittington, 2008) confer successful innovation is typically done through relationships. At GSK, ten of their eleven top consumer health conduct brands began as collaborations with outside innovators (GlaxoSmithKline, 2009), Panadol is the number one over-the counter consumer health care product internationally, whilst Sensodyne ranks number two internationally in oral care (Wright James, 2009). GSKs consumer healthcare innovation portal appeals to external innovators and provides ingress to technology experts who erect ideas into innovations that align with the companys competitive strategy. It is achieved through legal partnerships, which create mutually dear relationships, bringing new ideas to life (GlaxoSmithKline, 2009). A further example of such open innovation was GSKs announcement to share research and patent portfolios for human immunodeficiency virus drugs with its rival Pfizer in a hope of accelerating drug development in this area and create value for customers in less developed countries (The Economist, 2009). This inembodied business created revenue of $1.6 one million million million last year, and further exhibits how knowledge management and the pursuit of new knowledge can shape competitive strategy. scienceAcquisition routines bring new resources, and are a source of much(prenominal) sought after external linkages, which distribute knowledge and technology into the firm ( Gulati, 1999). Two important acquisition incentives are those of market expansion and extending product portfolios (Atuahene-Gima Patterson, 1993). These incentives are today shaping GSKs competitive strategy under the advocate of Andrew Witty. In early 2009 GSK acquired Bristol-Myers Squibb Pakistan for $36.5 million. The deal meant that GSK acquired a portfolio of over 30 well up established pharmaceutical brands and bolstered its position as the top selling pharmaceutical company in emerging markets. The portfolio is complementary to GSK, and provides a wealth of new opportunities in fast growing market areas to create value for both the firm and its customers (Bicknell, 2008). This once more exemplifies the role that knowledge management can have in acquisition, and therefore competitive strategy of GSK.Strategies are both plans for the future and patterns from the past (Mintzberg, 1987). This statement recognizes the need for knowledge management ascribable to its inherent experience, values, and contextual information in crafting strategy. It in like manner recognizes the need to detect current knowledge and that knowledge which it needs for future business growth. Powell et al (1996) found that knowledge creation processes that included external linkages in the form of alliances and acquisitions led to superior RD performance. As (Eisenhardt Martin, 2000) also found, external linkages were crucial to effective knowledge creation in their extensive study of the pharmaceutical industry. Glaxos 9.1 billion acquisition of Burroughs Wellcome in 1995 was driven by expectations of cost savings , a strengthened product pipeline and mendd market position as well as the challenges presented by the expiry of the patent of Zantac Glaxos and the industrys frontmost blockbuster drug (James, 2002). Thus, RBV emphasizes that successful strategy is based on a firms ability to identify, accumulate and deploy resources that match market opportunities and are vex ed for competitors to imitate (Amit Schoemaker, 1993). Acquisitions can further help firms reconfigure their resources, allowing adjustment to a changing business environment in GSKs case it strengthened their ability to deliver their mission, and ultimately the values behind their strategy. This further attests the role of knowledge management in crafting competitive strategy, and supports the need for acquisitions to maintain a competitive advantage. consequenceKnowledge management should reflect the competitive strategy of the firm, and a firms competitive strategy must drive knowledge management. By exploring knowledge, knowledge management, innovation and acquisitions this work has evaluated knowledge as an asset integral to the firms competitive strategy. In the case of GSK, they have formed their own knowledge management strategy, and set the greatness of knowledge in guiding their innovation and acquisitions. Knowledge management, therefore, plays a major role in GSKs st rategy.President John F. Kennedy once say In a time of turbulence and change, it is truer than ever that knowledge is power. This essay has emanated Kennedys quote by identifying knowledge as the crux of new thinking and value creation, and therefore, economic power. As discussed, knowledge not only complements a firms strategy but also provides competitive advantage. At GSK this knowledge is transformed into powerful, marketable drugs. Shepard (2000) further supports this point by stating that knowledge, while difficult to quantify, and even more difficult to manage is a strategic corporate asset.Having recognized the importance of knowledge to the firm, this work then directed towards knowledge management. As was displayed, GSK adopted their own knowledge management strategy in a bid to encourage entrepreneurial initiatives and stimulate business growth through the release of knowledge. As (Halawi, McCarthy, Aronson, 2006) comment, an organization managing knowledge well has the say-so to create significant value, but only if it is linked to its overall strategy. This reinforces the opening quote, and also provides the foundation not only to GSKs knowledge management, but also to their innovation and acquisition. The role of knowledge management is to find, understand and use knowledge to create value, thereby guiding a firms competitive strategy.Innovation is an encapsulation of the use of knowledge management. It can be seen that knowledge management is the formulation of and access to knowledge, experience and expertise that encourage innovation. At GSK this is pursued both in-house and through open innovative relationships. As Halawi et al (2006) support knowledge management pleads you to gaze at the informal networks and protocols, sharing experiences and know-how, in addition to heathenish and technological elements that drive creativity and innovation.The discussion finally examined acquisition as a strategy for creating external linkages and deli vering new resources and that would not only improve the firms competitiveness but also RD and innovation. Glaxos acquisition of Burroughs Wellcome and Bristol-Myers Squibb Pakistan clearly illustrate this and give tongue to knowledge managements role as a driver behind GSKs acquisitions. done detailing the four areas in this essay, and linking knowledge management and competitive strategy this work has shown that knowledge management can and does play an integral role in shaping the competitive strategy of the firm. It creates competitive advantage and develops spirit competences. At GSK, this has been achieved through its own knowledge management strategy, innovation and acquisition. It must be noted, however, that many organizations do not understand the strategic importance of their knowledge assets in building, and maintaining sustainable competitive advantage (Halawi, McCarthy, Aronson, 2006).BibliographyAmit, R., Schoemaker, P. (1993). strategical assets and organizatio nal rent. strategic vigilance Journal 14 , 33-46.Anon. (2004). Innovation at GlaxoSmithKline is it the safest way? 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