Co-operative Competitive Advantage
Competitive advantage derives from a number of possible sources. Location (proximity to markets or to suppliers and to good distribution links can be one obvious one. Lower costs and economies of scale and distribution are another. Underpinning the effectiveness of any business is its human capital (see under Publications Davis (2004) Human Resource Management in the Co-operative Context) and also (see Education and Training) and financial and technological resources. However without effective marketing and brand recognition these other advantages will not be enough in the modern marketplace to ensure competitive advantage. It is here that co-operative values play a critical role in addition to, but not in place of, the standard quality-price relationship driven by the customer which is presented in any effective businesses offer. The co-operative can generate added social value by the ethical stance that its values insists it adopts in the conduct of its business if it is to be true to its wider social purpose. Ethical business driven by co-operative values and purpose is never a slogan rather it is a methodology. For example, if we take financial services – all co-operative banks and credit unions must adopt appropriate banking services at competitive prices but only the co-operative bank and credit union can, due to their ownership structure, offer their customers input as to how their customers (investors/savers) money will be re-invested. By listening and gathering good quality information on their customers ethical priorities and reflecting these in their offer co-operative banks and credit unions can gain competitive advantage. Good market research and continuous feedback and updating to stay in touch with the customer are essential. So too is close management of the supply chain relationship to ensure those adopted ethical standards are adhered to as closely as the economic and other quality standards by the co-operatives suppliers.
The brand identity and differentiation for all co-operatives lies crucially with their values being made explicit and understandable and their values ones that their customer base can identify with. As people centred businesses rather than for profit businesses the co-operatives have a clear advantage.
The organisational culture and HRM aspects are critical for the co-operative brand identity too for the co-operative must live its identity not just communicate it in advertisements. This requires the right management and organisational culture and this starts at the top with the culture and values of the CEO and the Board.
Providing relevant and innovative products and services together with their effective delivery and access to the customer / member are also critical for being and remaining competitive. Innovation only arises when we see the need to change and the direction in which we must change. Keeping track of the market and the wider environment are essential elements in any the evolution of a competitive strategy. (See Education and Training)
The correct interpretation of the data – internal and external – requires effective management information systems (MIS) upon which strategy may be developed but always the data and our response needs to be viewed from the unique standpoint of co-operative purpose, values and identity. This is our differentiation and our competitive advantage. (For more on this see Publications Davis P (1999) Managing the Co-operative Difference. Also our short courses under Education and Training)
Increasingly as the population and urbanisation grows and industrialisation and its consumer driven philosophy of capitalism matures globally, issues of climate change, resource depletion, environmental degradation and species depletion will come increasingly to bear on the way business can be conducted. Profit and capital growth and consumption will have to be curbed to accommodate the new realities. Sustainability and a co-operative value based alternative vision of what humanity should aspire to are coming of age. For more on this go to Sustainability and Fraternity.