As the turbulence of business environments caused constantly shortening in product life cycle in todays’ business world, therefore the notion of sustainable competitive advantages has significant importance, meaning that the goal of establishing any business is to obtain sustainable competitive advantages (SCA) instead of temporary business advantages.
One of the approaches to SCA is resource-based view (RBV) of firms. In RBV, firms are different even within an industry and the differences among them come from their resource. Several methods are used in order to conduct SCA approaches in business including: Sense and respond method, critical factor index (CFI) and manufacturing business strategy.
CFI was introduced by in 2007. This method supports decision makers by indicating which attributes of business process are critical basedexpectation and experience of companies’ employee, customer or business partners.
SCA Risk Level
As SCA is the measurement of risk level for that the operation strategy, three indexes are used to measure the risk level of the operation strategy for sustainable competitive advantages. These three measures are: MAPE, RMSE and MAD.
The following results are based on 15 responses out of 40 sent questionnaires. The response rate is not much higher than 40 percent, else big differences could have been identified. To determine the critical and balanced areas of business, the ‘traffic light’ concept is used. This concept includes three indicators: red (area is critical and problematic and should be given more attention and resources), green (area is stable and resources are well allocated), yellow (area is scattered and disorganised; respondents do not have the same understanding and point of view concerning this area).
Furniture Company A
The results confirmed that in Company A, expectations (ideal) are higher than experience (real) in all 21 parameters being measured. Expectations on knowledge and technology management, organisational systems, and information systems are among the highest in Company A.
Using the formulas for calculating CFI, the attributes namely 1.1 (Knowledge and Technology Management), 1.2 (Training and Development of the Company), 3.1 (Leadership and Management System of the Company), and 4.3 (Availability of Information in Information Systems) would have been identified to be most critical of Company A.
Conversely, the BCFI shows that the attributes 1.2 (Training and Development of the Company), 2.2 (Reduction of Unprofitable Time in Process), and 3.4 (Utilising Different Types of Organising Systems) are considered the most critical ones in the company.
Furthermore, it was observed that extreme deviations can be monitored for the attribute numbers 1.1 (Knowledge and Technology Management), 1.3 (Innovativeness and Performance of Research and Development), and 3.1 (Leadership and Management System of the Company). Hence, attributes 1.1 (Knowledge and Technology Management), 1.2 (Training and Development of the Company), 3.1 (Leadership and Management System of the Company), and 4.3 (Availability of Information in Information Systems) are considered as being among the most critical attributes, whereas only 1.3 (Innovativeness and Performance of Research and Development) is considered as critical with the BCFI approach.
Particularly, attributes 1.1 (Knowledge and Technology Management), and 3.1 (Leadership and Management System of the Company) reveal the pitfalls of the CFI equation. The company expectation is high; however, experience is also slightly rising.
Firstly, this signifies a normal environment of many organisations in which employees are expecting better working environment in terms of knowledge and technology management, organisational systems and information systems. Secondly, there has been a higher expectation of the organisational process and workflows, such as time delivery to customers and control and optimisation of inventories in Company A.
On the contrary, there has been slightly lower expectation on the innovativeness and performance of research and develoon. This partly could be achieved by internal production of furniture parts, hence reducing furniture components’ import. Thus, Malaysia could export a more competitive and much higher local furniture contents to attain higher export values. When incomes increase, costs will also increase, which means Malaysia has to ‘move up the value chain’.
Hence, at micro economic level, this signifies that Malaysia’s furniture firms must move into enhanced new product research then export more technologically advanced products, such as high-end office furniture, hybrid paper and highly engineered veneer, to newly expanding market such as the Middle East, India and Brazil.