Necessity Breeds Oportunity: Constraints, Innovation and Competitive Advantage

The quest for competitive advantage drives companies to increase both efficiency and responsiveness to customers, but there is a trade-off between the two. Improving responsiveness to customers entails higher inventory, distributed warehousing, and multiple transportation channels that raise costs and compromise efficiency. Companies find this balance harder to achieve in emerging markets because of constraints in the external environment like infrastructural bottlenecks and talent shortages. This doesn’t mean a balance between efficiency and responsiveness is unattainable.

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