Foundations of Corporate Success

Abstract
Corporate success derives from a competitive advantage, which is based on distinctive capabilities. Competitive advantage relates to the unique character of a firm's relationship with its suppliers, customers, or employees, which must be precisely identified and applied to the relevant markets. Distinctive capabilities as sources of competitive advantage can be separated into four broad categories.Architecture refers to a network of relationships or implicit contracts within or around the firm. It adds value by helping to create organizational knowledge and routines, which enable the company to respond flexibly to changing circumstances and allow easy exchanges of information. Reputation is the main commercial mechanism for conveying information to consumers. By protecting and exploiting innovation, the company can derive competitive advantage, if it can appropriate the gains associated with it. A final potential source of competitive advantage not based on the distinctive capabilities of firms is a strategic asset that includes government‐mandated monopolies or other features of market structure, which restrict market access by competitors.Firms that enjoy distinctive capabilities must seek to transform them into competitive advantages. To achieve this, distinctive capabilities must be sustainable and their benefits must be appropriated through corporate and competitive strategies. Corporate strategy is concerned with the businesses the firm is in, competitive strategy with its relationship with other firms in the businesses it chooses. In each case, the key measure of corporate success is the ability of the firm to add value to the resources it uses.

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