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Knowledge Management and the Competitive Strategy of the Firm

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The study reviews literature that tackles knowledge management in relation to the competitive advantage of an organization. The literature includes Porter ‘5 forces model’, and ‘Wernerfelt’s’ resource base view of a firm. The relationship between KM and strategy formulation by use of resource-based perception of the organization is established. The applicable literature that links KM with strategies is examined. The paper culminates with research findings, implications, and conclusions. Porter based his argument on SWOT analysis concept. Porter views that the five force model depends heavily on the competition level in the industry. The five forces include. the threats presented by new entrants in the market. suppliers bargaining power. threats offered by the substituting goods, and the jockeying among the existing contestants. When an organization has perfect information pertaining to the existence of the above factors they tend to conquer the market. This is because the organization will devise a strategic plan that counteracts the actions of the competitors. The strategy focuses on external factors that analyzing the opportunities and threats evident in the industry. Barney views that organizations that utilize their internal strengths to act on the opportunities at the same time weakening threats and avoiding internal weakness attain a significant value on the competitive competition. The theory argues that a firms’ success lies in its ability to incorporate its ability and resources. A firm’s resources must never be easily imitated by the competitors. Various researchers supporting the theory including Penrose, Barney, and Mahoney and Pandian asserts that. competitive advantage resources must be valuable, with no substitute and inimitable.