Competitive Advantage Strategy, Supply Chain Integration And Business Performance Relationship

As a prelude of this century, both Mainland China and Taiwan became members of World Trade Organization. It launched their new era of global competition. Accordingly, it has brought them deep concerns toward the pressure of competition and how these cross-strait companies deal with the upcoming challenges. For those companies with the same Chinese culture in this region, the competition facing them deemed as an academic research is a new and serious thing. However, this has been seen as a normal course in the western society where the companies follow the Darwinism to survive under the economic rule of competition, which is unavoidable and should be faced bravely. On competition, there are a great number of strategies provided by an ancient Chinese military theorist-Sun Tze. However, these military maneuvers are restricted to the real warfare. For modern companies' virtual war, they have to seek the support of microeconomics and its related theory.Michael E. Porter is a theorist of modern competition. The core theory of porter's is originated from Industrial Organization which stems from the neoclassic economics, and focuses on industrial structure and competition among the industries. In 1985, Porter posited a theory of three competitive advantage strategies which are "Cost-Leadership" * "Differentiation" - and "Focus". These have been referred while the companies formulating their competitive strategies. In addition, Porter's theory has been learned and researched by academic field. It does not only propose a typology of strategy types but advocate the use of value chain as a way to execute the strategies. It thus combines the concept of value chain with competitive advantage strategies by restructuring value chain to achieve the advantage of "Cost Leadership", and by creating uniqueness of value chain to attain "Differentiation" which make the companies to earn above normal profit and so as to sustain their competitive advantages.Porter's theory has inspired business and academic field an attempt to dig inside of competitive advantages. A few academic researchers suggested a theory of " Resource-Based View" to decompose competitive advantages as tangible and intangible resources. This view changes the definition of companies. It then will not define the type of companies by their products and market segment but by their unique resources and capabilities.The competitive advantage concepts have shifted the strategy research from competitive analysis among industries to individual firm. It build up the basic model of operation in modern companies, and the study of business competition become a trend. But due to the boundary of national economy and international trade turning vague, the clear-cut divisionbetween sales and manufacturing, together with the demand for transactional efficiency, the companies begin to use supply chain as a network to cope with.The supply chain is a sort of value chain. It is not only linked inside activity but stretched out to suppliers' and customers' value chain. Though the supply chain management cannot be seen as a sole discipline, its theoretical foundation derived from the industrial dynamics, the organization economics, and alliance and network theory makes the study of supply chain more diversified.The markets predominantly exist the bullwhip effect due to the nature of dynamic. It will cause the disorders in inventory and distribution, and the damage from such disorders is more serious to the chain than to the individual firm. In order to solve it, there are common practices of using information sharing to substitute inventory. Besides, the transaction cost will increase resulting from the phenomenon of information asymmetry and organization's bureaucratism. The supply chain can share the information, which makes it possible to downsize the governance structures, eliminate opportunism and enhance the transaction value.The supply chain integration is consummated by early involvement of suppliers in product designing and manufacture planning, which will genera...