Knowledge Management A Competitive Advantage Business Essay - Free Essay Example

Sample details Pages: 9 Words: 2704 Downloads: 8 Date added: 2017/06/26 Category Management Essay Type Narrative essay Did you like this example?   In the twenty first century landscape with all its uncertainty and dynamism, many firms are competing in a complex and  challenging environment which is being transformed by many factors ranging from globalization, technological  development and increasingly rapid diffusion of technology, to the development and use of knowledge (Hitt, Keats, and  DeMarie, 1998).  As such, the foundation of organizational competitiveness has shifted from an emphasis on physical and tangible  resources to knowledge (Wong and Aspinwall, 2005) and managing knowledge-based resources has become the key for  sustaining competitive advantage (CA) and superior performance (Grant, 1996b; Grover and Davenport, 2001; Jackson,  Hitt, and DeNisi, 2003; Sharkie, 2003; and Teece, Pisano, and Shuen, 1997). To deal with this enhanced  dynamism and uncertainty of the business environment, one of the current strategic philosophies assis ting firms to develop strategic capabilities is the knowledge management. It helps the organizations to systematically acquire,  create, share, and use knowledge so as to develop, renew, and exploit their  knowledge-based resources, thereby allowing them to be proactive and adaptable to external  changes and attain competitive success. . Don’t waste time! Our writers will create an original "Knowledge Management A Competitive Advantage Business Essay" essay for you Create order Review literature:- Under the light of the previous researches, some researchers  (Davenport and Prusak, 1998; (Zack, 1999) (Alavi Leidner, 2001) noted that competitive advantage is  realized only when the organizations tracking methods  and ways are efficient and distinctive and one of those  ways is through the knowledge management of the organization  that have achieved competitive advantage not for  a specific period, but a long term.  (Gupta Mcdaniel, 2002) studied knowledge management  and competitive advantage by examining the  vital link between the management of knowledge in  contemporary organizations and the development of a  sustainable competitive advantage. The used variables  are conceptualized in terms of organizational effectiveness,  efficiency, core competency, costs; knowledge  acquirement, knowledge filtering, knowledge configuration,  knowledge dissemination and knowledge ap plication. (Goh, 2005) also identified that the field of knowledge  management has emerged strongly as the next source of  competitive advantage. (Ismail Ong, 2008). Emphasized that firms can  achieve the sustainable competitive advantage by information  technology facilities. He sees that even if a firm  owned the most sophisticated information technology  facilities which are impossible for the competitors to  imitate or substitute, and for sure it is rare, but if there is  no knowledgeable personnel in the organization, or the knowledgeable personnel in the organization is not willing  to utilize these facilities, these facilities would not generate  any value to the organization. Obviously, to achieve  sustainable competitive advantage, knowledge, willingness  to use operations and availability of facilities must  co-exist.  Hence, the question before the organizations is how shoul d they  develop a knowledge management system to coordinate  people, technology and infra-structure to create  advantages competitiveness and sustainability in  business environments? Knowledge:- Knowledge is a different term from data and information. Data is simply raw facts, measurements etc. Information is organized or processed data that is timely and accurate. Knowledge as defined by (Tiwana, 2000) is the actionable (relevant) information available in the right format, at the right time, and at the right place for decision making. For example, sales of a particular year will be simply data, if we process the sales data and find sales in the north region is more, it will be information. By applying our experience we can conclude that south region requires more marketing efforts than north, it is knowledge. Knowledge is a valuable source for the organization because it helps the organization in taking important decisions in the rapid changing business environment. Knowledge is dynamic in nature. This implies that todays knowledge may well become tomorrows ignorance if an organization fails to update knowledge as environmental conditions change. Definition of Knowledge Management:- Knowledge management is an emerging concept and has got many different definitions. The term knowledge management was first introduced in a 1986 in a European management conference. Alternative definitions have been proposed since that attempt to capture the complexities of knowledge management. The 20  American Productivity and Quality Center defined knowledge management as the strategies and processes of identifying, capturing and leveraging knowledge. (knapp, 1998) defined knowledge management as the art of transforming information and intellectual assets into enduring value for an organizations clients and its people. Darroch also defined knowledge management as the process that creates or locates knowledge and manages the sharing, dissemination, and use of knowledge within the organization.   The traditional definitions of knowledge management focused only on the knowledge that is recognized and already articulated in some form. However, increasingly, knowledge m anagement is also incorporating the managing of important tacit knowledge (Sabherwal    Becerra-Fernandez, 2003). Davenport and Prusak (1998) defined knowledge   management as the management of a corporations knowledge through a systematic and   organizational specified process for acquiring, organizing, sustaining, applying, sharing,   and renewing both tacit and explicit knowledge from employees to improve   organizational performance and to create value.   Wiig (1994) suggested that knowledge management in an organization must be   considered from three perspectives, each with different scopes and purposes: (a) a  business perspective focusing on why, where, and to what extent the organization must   invest in or exploit knowledge, and which strategies, products and services, alliances,   acquisitions, or divestments should be considered from a knowledge-related point of view;   (b) a management perspec tive focusing on determining, organizing, directing, and   monitoring knowledge-related activities required to achieve the desired business strategies and objectives; and (c) a hands-on operational perspective focusing on   applying the professional skill to conduct explicit knowledge-related work and tasks.   In fact, knowledge management is a principle that is aimed at satisfying and exceeding the customers expectations (Keskin, 2005). Knowledge management is a relatively new business philosophy. The goal of knowledge management is to identify, capture, store, maintain, and deliver useful knowledge in a meaningful form to anyone who needs it, anyplace and anytime, within an organization. Knowledge management is about sharing and collaborating at the organizational level. Knowledge management has the potential to revolutionize the way we share expertise, make decisions, and conduct business. History of knowledge management:- Knowledge management era started with the use of different programs which include on-the-job discussions, formal apprenticeship,  discussion forums, corporate libraries, professional training and mentoring programs. The use of computers in the second half of 20th century brought a revolution in the knowledge management field. It resulted in the specific  adaptations  of technologies such as  knowledge bases,  expert systems,  knowledge repositories,  group decision support systems,  intranets, and  computer-supported cooperative work  which developed the emerging knowledge management field to a large extent. In 1999, the term  personal knowledge management  was introduced which refers to the management of knowledge at the individual level (Wright, 2005). In terms of the enterprise, early collections of case studies recognized the importance of knowledge management dimensions of strategy, proce ss, and measurement (Morey, Maybury Thuraisingham 2002. Recently with the use of the  Web 2.0, the concept of Knowledge Management has taken into consideration the participation of people and  emergence. This line of evolution is termed  Enterprise 2.0  (McAfee 2006). However, there is an ongoing debate and discussions (Lakhani McAfee 2007) as to whether  Enterprise 2.0  is just a fad that does not bring anything new or useful or whether it is, indeed, the future of knowledge management (Davenport T. , 2008) Knowledge management cycle:- The  knowledge  management  cycle  as  given  by  Turban  involves  six  steps.  To  keep  the  knowledge  management  system  effective,  the  knowledge  has  to  be  updated  with  time.  The  knowledge  management  cycle  works  as  follows:- Create  knowledge:  Ãƒâ€šÃ‚  knowledge  creation  is  the  generation  of  new  ideas,  insights  or  routin.  It  involves  developing  new  ways  of  doing  things  or  develops  knowhow.  Sometimes  new  knowledge  is  brought  in  or  sometimes  own  knowledge  is  improved . Capture  knowledge:  Ãƒâ€šÃ‚  new  knowledge  must  be  identified  as  valuable  and  be  represented  in  a  reasonable  way. Refine  knowledge:  Ãƒâ€šÃ‚  new  knowledge  must  be  placed  in  context  so  that  it  is  reused.  That  is  where  human  insights  must  be  captured  along  with  explicit  facts. Store  knowledge useful  knowledge  must  be  stored  in  knowledge  repository  so  that  others in  an  organization  can  access  it. Manage  knowledge:  Ãƒâ€šÃ‚  a  knowledge  repository  must  be  updated  so  that  it  holds  the  current  data  that  is  relevant  and  accurate. Create knowledge Capture knowledge Refine knowledge Store knowledge Manage knowledge Disseminate knowledge Disseminate  knowledge: knowledge  must  be  made  available  in  a  right  format  to  anyone  in  the  organization  who  needs  it,  anywhere  and  anytime.   (turban, sharda, delen) Benefits  of  knowledge  management:- Within  the  usage  of  Knowledge  Management,  the  company  can  have  following  advantages:- Innovation  with  the  help  of  flow  of  ideas: The  knowledge  management  programs  can  allow  employees  and  departments  to  see  the  overall status  of  the  company  about  a  specific  development  field.  With  the  help  of  this  ability,  new  ideas  and  innovative  techniques  can  be  emerged  with  respect  to  the  existing  knowledge. Improving  the  customer  satisfaction  by  reducing  the  responseƚ  time: With  the  help  of  the  Knowledge  Management  usage,  the  employees  of  the  company  will  be  able  to  find  the  opportunity  of  appropriate  solutions  to  customers  with  an  acceptable  response  time  because  KM  will  allow  them  to  find  the  necessary  information  about  the  demand  of  the  customer  more  relatively  and  rapidly. Increasing  the  revenues: With  the  help  of  the  KM,  the  necessary  product  and  service  that  the  company  provides  will  be  locate d  in  the  market,  with  the  help  of  the  rapid  interdepartmental  communication  to  use  the  right  information  at  the  right  time. Keeping  employee  dynamic: The  employees  are  important  to  be  kept  alive  during  critical  transactions.  With  the  help  of  Knowledge  Management,  the  information  system  that  contains  the  functions  of  KM  can  record  the  value  of  every  employee  and  allows  managers  to  reward  them  if  they  have  critical  additions  to  the  business   process  transactions  of  the  company. Process  reduction: With  the  help  of  KM,  the  costs  and  amount  operations  can  be  reduced  by  eliminating  the  redundancy  of  process  phases  and  unnecessary  ones. Sustained  competitive  advantage:   KM  can  allow  companies  to  increase  the  importance  of  intellectual  properties  and  knowledge-based  assets  that  can  be  costly  to  imitate  n  the  market  that  the  company  locates  in.  This  can  help  the  company  to  have  a  com petitive  advantage  in  a  long-term  period. Knowledge  management  can  improve  the  total  efficiency,  productivity  and  revenues  in  any  business  transaction  if  it  can  be  used  well. Competitive  advantage:-  As  the  global  competition  becomes  increasingly  fierce,  how  to  achieve  competitive  advantage  starts  obtaining  more  attention. (Barney J. , 1991) noted  that  when  an  organization  is  implementing  a  value  creating  strategy  not  simultaneously  being  implemented  by  any  current  or  potential  rivals,  then  the  organization  has  a  competitive  advantage.  And  when  other  organizations  are  unable  to  copy  the  benefits  of  this  strategy,  it  confirms  that  the  organization  has  a  sustainable  competit ive  advantage.  In  2008,  Barney  distinguished  two  types  of  competitive  advantage:  temporary  and  sustainable  competitive  advantage.  According  to  him,  competitive  advantage  typically  results  in  high  profits,  but  these  profits  attract  competition,  and  competition  limits  the  duration  of  competitive  advantage  in  most  cases,  therefore,  most  competitive  advantage  is  temporary.  On  the  other  hand,  some  competitive  advantages  are  sustainable  if  competitors  are  unable  to  imitate  the  sourceÃ⠀šÃ‚  of  advantage  or  if  no  one  conceives  a  better  offering.  Furthermore,  refers (Al-hawary hani, 2009) to  competitive  advantage  as,  to  create  some  barriers  that  make  firms  performance  imitation  difficult.  That  is,  since  the  competitive  advantage  is  at  the  heart  of  firms  performance,  it  should  protect  itself  from  being  despoiled  and  assimilate  new  sources  of  technologies,  skills,  and  core  competencies. Michael  porters  concept  of  competitive  advantage:- According  to  porter,  when  a  firms  profits  are  more  than  the  industry,  its  said  to  have  a  competitive  advantage.  Michael  porter  identified  two  types  of  competitive  advantage:- cost  advantage differentiation  advantage Cost  advantage  is  enjoyed  by  the  firm  when  it  produces  the  same  product  as  its  competitors  but  at  a  lower  cost.  Differentiation  advantage  results  when  a  firm  delivers  benefits  that  exceed  those  of  competing  products.  Thus  a  competitive  advanta ge  enables  the  firms  to  deliver  superior  value  to  customers  and  superior  profits  for  itself.  Knowledge  management  a  competitive  advantage:- Knowledge  management  helps  in  gaining  competitive  advantage  in  the  following  ways:- Knowledge  management  can  Increase  productivity  of  an  organization  by  applying  effective  organizational  knowledge  management.  By  having  your  knowledge  processes  in  a  structure,  it  will  allow  those  with  the  necessary  knowledge  to  quickly  share  or  apply  it  and  you  can  reduce  wasteful  meetings  and  inefficient  knowledge  bottlenecks.  This  will  help  you  get  more  work  hours  from  your  em ployees  and  create  a  cost  advantage. The  technological  solutions  can  be  applied  in  an  organization  for  knowledge  dispersal  within  an  organization.  By  offering  easier,  more  intuitive  ways  for  your  employees  to  create  and  share  knowledge,  your  company  can  produce  more  and  better  knowledge  than  your  competitors,  thus  gaining  a  quality  advantage. Foster  and  reward  the  sharing  of  knowledge.  Whether  creating  master/apprentice  relationships  or  monetarily  rewarding  those  who  share  knowledge  within  your  company,  take  steps  to  ensure  that  every  employee  is  trying  to  share  useful  knowledge. Its  the  knowledge  management  tools  that  help  the  organization  in  identifying  the  unmet  needs.  Having  a  proactive  approach  to  satisfy  those  needs  is  definitively  going  to  provide  an  organization  a  competitive  advantage.  Good  knowledge  management  also  allows  in  identifying  the  niche  markets  and  by  addressing  the  needs  in  these  niche  marketsà ‚  is  going   to  prove  one  of  the  attribute  of  your  organization  success. Almost  all  organizations  are  using  the  knowledge  management  to  remain  competitive  in  market.  Taking  the  example  of  WallMart,  the  worlds  largest  retail  corporation  ,  it  views  the  knowledge  management  not  only  as  a  way  of  enhancing  profitability  and  financial  growth  but  also  as  a  way  of  remaining  competitive  in  a  turbulent  world  of  businesses.  It  has  invested  a  lar ge  amount  of  money  in  building  a  strong  knowledge  management  system.  It  is  because  of  the  effective  km  system  that  it  has  emerged  as  the  worlds  largest  corporation.  WallMart  employs  different  tools  of  knowledge  management  to  remain  competitive  in  market.  Starting  from  the  simple  tools  of  knowledge  management  like  onthejob  discussions,  formal  apprenticeship,  discussion  forums,  corporate  libraries,  professional  training  and  mentoring  programs  to  the  advanced  technologiesƚ  like  knowledge  bases,  expert  systems,  knowledge  repositories,  group  decision  support  systems,  intranets,  and  computersupported  cooperative  work,  it  uses  each  and  every  technology  of  knowledge  management  to  have  a  competitive  edge  in  the  market.  The  knowledge  management  helped  the  WallMart  in  cutting  operational  costs  and  building  up  a  value  for  its  shareholders.  The  employees  in  WallMart  are  very  much  satisfied  with  the  knowledge  management  system  functional  in  almost  all  units.  With  the  tools  of  knowledge  management  the  best  employees  in  WallMart  are  chosen  and  accordingly  rewards  are  given.  TheWallMart  stores  reliable  knowledge  management  skills  have  resulted  in  enhanced  efficiency  in  service  delivery  and  customer  care  as  well  as  development  of  great  competition.Hence,  an  effective  knowledge  management  system  is  one  of  the  driving  forces  for  WallMart  for  its  great  success.  The  other  examples  that  proved  thatà ‚  effective  knowledge  management  can  help  achieve  organization  goals  and  help  in  remaining  competitive  in  market  are  sportswear  giants  Adidas  and  Nike. (KNOWLEDGE-MANAGEMENT-A-CASE-STUDY-OF-WALLMART) Conclusion:- Competitive  advantage  is  at  the  heart  of  a  firms  performance  in  todays  challenging  and  rapidly  changing  environment.  To  secure  the  competitive  advantage,  firms  should  be  able  to  continuously  acquire,  create  and  disseminate  knowledge  across  various  levels  of  the  organization.  Knowledge  is  central  to  strategy  formulation  and  Implementation,  knowledge  management  has  become  a  key  strategic  task  facing  managers  for  achieving  success  in  todays  complex  and  dynamic  environmentsà ‚  (Muthusamyand  Palanisamy,  2004).  The  shifting  winds  of  change  in  todays  business  environment,  where  the  Market  place  is  increasingly  competitive  and  the  rate  of  innovation  is  rising,  have  made  Enterprises  realize  that  knowledge  is  their  key  asset.  It  is  pointed  out  that  the  most  valuable  Assets  of  the  21st  Century  enterprise  is  its  knowledge  and  knowledge  workers(Sunman  and  Kruger,  2004).  It  is  argued  that  knowledge  is  displacing  natural  resources,à ‚  capital  and  labor  as  the  basic  Economic  resource  in  the  new  economy.  Knowledge  mostly  the  tacit  knowledge  is  hard  to  imitate  so  effectively  managing  such  type  of  knowledge  in  an  organization  is  definitely  going  to  lead  the  organization  to  a  place  which  for  others  will  be  difficult  to  achieve.  Knowledge  management  helps  us  in  identifying  unmet  needs  in  the  market.  Having  a  proactive  approach  to  satisfy  these  needs  is  going  toà ‚  place  your  organization  above  all  in  the  turbulent  competitive  business  environment.  So,  every  Organization  should  start  thinking  of  a  sound  knowledge  management,  because  in  a  knowledge-driven  economy  its  the  only  source  of  achieving  success  over  others.