Competitive Advantage
Competitive advantage is a set of unique features of a company or organization that allows it to outperform its competitors. It is the strategic advantage that a company has over its rivals in the marketplace. It can be achieved through offering better products or services, having a more efficient production process, or by providing better customer service. A competitive advantage can be gained by offering customers greater value, either by charging lower prices or by providing additional benefits and services that are not available from competitors.
History of Competitive Advantage
The concept of competitive advantage was first introduced by Michael Porter in his 1985 book, Competitive Advantage: Creating and Sustaining Superior Performance. In this book, Porter argued that companies should focus on developing and sustaining a competitive advantage in order to succeed in the marketplace. He identified three main sources of competitive advantage: cost leadership, differentiation, and focus. Cost leadership involves being the lowest-cost producer in an industry, while differentiation involves offering unique products or services that are not available from competitors. Focus involves targeting a specific market segment and tailoring products and services to meet the needs of that segment.
Comparison Table
| Strategy | Cost Leadership | Differentiation | Focus |
|---|---|---|---|
| Objective | Lowest cost producer | Unique products/services | Targeted market segment |
| Competitive Advantage | Lower prices | Unique benefits | Tailored products/services |
Summary
Competitive advantage is a set of unique features of a company or organization that allows it to outperform its competitors. It is the strategic advantage that a company has over its rivals in the marketplace. It can be achieved through offering better products or services, having a more efficient production process, or by providing better customer service. Companies can gain a competitive advantage by offering customers greater value, either by charging lower prices or by providing additional benefits and services that are not available from competitors. For more information on competitive advantage, visit websites such as Investopedia, Harvard Business Review, and McKinsey & Company.
See Also
- Cost Leadership
- Differentiation
- Focus
- Strategic Advantage
- Market Segmentation
- Value Proposition
- Porter’s Five Forces
- SWOT Analysis
- Product Differentiation
- Pricing Strategy
