Furthermore as the global economic system transitions from industrial to knowledge economy (Exhibit below), companies which developed their competitive might (to secure significant competitive advantage) by perfecting the essential tenets of the industrial economy, will now be required to embrace a new set of principles that will define their success in the new economy. Indeed, marginal economic value of “more and better” of the formula of the past two decades will be significantly diminished. Accordingly forward looking companies will need to re-evaluate the rules of engagement with the global marketplace with a broader and deeper strategic perspective.
Transition Requirements from Industrial to Knowledge Economy
Depending upon the sectors, companies will be required to orchestrate a wider range of strategic levers to shape their competitive advantage along the life cycle of a business model. Exhibit below presents the “strategic pentagon model” which lays out how in the future companies in securing competitive gains, instead of just relying on one or two competitive advantage(s) - say cost advantage and/or network advantage, should consider examining ways to differentiate their competitive positioning based on mix of different differentials such as knowledge/technology advantage, brand (goodwill and trust) advantage, network (ecosystem to secure global reach) advantage, and/or “customer intimacy” advantage (particularly for B2B space) as competitive environment.
“Pentagon Model” for Securing Global Competitive Advantage
Accordingly, for a multi business organizations, business model strategies must be integrative across product/service lines, yet distinctly customized to local communities both in the domestic and international environments.
1. Pentagon Model is developed by Partha S Ghosh to help companies explore strategic paths by dynamically orchestrating different competitive levers to secure differentiated position in the Global economy