In a competitive industry, the powerful will exploit the powerless to their advantage in the relentless pursuit of self interest. Buyers exert power through their ability to switch suppliers and/or demand more favorable terms and conditions of their transactions. Suppliers exert power by virtue of their control of important resources, and the resulting ability to raise prices or reduce quality.
Technology, although critical to the success of a business, is common in all segments and has lost its core function. Services, software and hardware are easily replicated by suppliers, hampering innovation and decreasing the strategic importance of technology. However, the role of technology in competitive advantage cannot be denied. It is important to note that it is not the technology itself, but how the technology is used and integrated into the business process that creates the competitive advantage among firms.
Both iRobot and Dyson belong to an industry which is triggered by consistent innovation of new products. Strategic alliances play an important role in developing competitive advantage in these firms. Strategic alliances play an important part in product development and distribution strategies. They rely on strategic alliances to provide technology, complementary product offerings and speedier access to markets.
In a highly competitive market, technology acts as the differentiating factor that sets innovative firms apart from the others. Porter (2001) argues that, companies will gain the competitive advantage only if the use technology to complement their existing business strategies, products and best practices. Companies should use technology as a valuable corporate asset and should differentiate itself from competitors by achieving a sustainable competitive advantage by having low operational costs, value added products, low production costs and excellent customer service. Dyson bulids vaccum cleaners that guarantee no loss of suction by using Root Cyclone technology that separate the dirt from air.
Bargaining power of buyers
There are a large number of companies competing against each other, in a constant struggle to innovate products that suit customer needs in the varying environment. Customers, therefore, have a variety of products to choose from. Companies differentiate from one another through product innovation and customer service.
iRobot strives to continuously improve their robots and exceed customer expectations by delivering highly reliable, high performance robots and providing world class support and service. Dyson makes vaccum cleaners that are guaranteed a life over 5 years by developing them to resist rough circumstances with no extra costs involved.
Since buyers are large, they exhibit very little control over the market with lower bargaining power. Firms compete with innovating products that provide unique solutions to customer needs. Firms also provide complimentary products to gain better customer base for their existing products.
Bargaining power of suppliers
Suppliers for specialized innovative products may not be very large in number and therefore may exhibit much bargaining power. Bargaining power is high for major suppliers of specialized materials and equipment who are