Competitive advantage is described as a condition that would put a particular firm in a superior position as compared to the rest of the firms in the market in that industry. Competitive advantage enables a firm to generate greater value for the firm that is allows the firm to generate a higher sales volume and retain more competitors as compared to their competitors. It gives the firm an edge over its competitors. There can be various different types of competitive advantages. Some of them include the customer retention rate and product offerings that is new innovative product as compared to their competitors, among others.
There are two main types of competitive advantage:
• Comparative advantage: this is basically the company’s ability to produce goods and services at a lower cost as compared to their competitors. this would mean that the firm would be able to sell their goods at a lower price than its competitors therefore, would be able to retain a larger margin on sales.
• Differential advantage: this is when a company’s products or services differ from that of its competitor...
A competitive advantage is essential to an effective strategy (Thompson, Peteraf, Gamble, Strickland III, & McGraw-Hill, 2013, pp. 12). Without a competitive advantage, Costco would soon be struggling to make ends meet. Based on Costco’s growth between 2000 and 2011, it appears that Costco has been building a competitive advantage, one that focuses on meeting the customer and employee needs before making a profit. Although this means that profits will be slightly lower, it does seem to be working as there is an almost continual growth in the
Narrow focus on limited value chain activities, competitor’s pricing war and lack of differentiation parity can erode the competitive advantage associated with cost leadership strategy. Similarly, imitation of differentiating features by competition and lack of perceived value of the differentiating features can erode the competitive advantage associated with differentiation strategy.
Below are some of the competitive advantages (or factors which led to competitive advantages) I identified in the case:
To reiterate, let’s construct another example of two companies that produce oranges. Company number one is located in Florida where it’s the perfect environment to produce oranges. Company number two however is located in Toronto, which to be fair, isn 't a suitable environment to produce natural oranges, unless of course they’re produced in a green house. Although both companies are able to grow and produce oranges, company number one has the absolute advantage because they use the much cheaper and natural methods, hence the greater demand. This theory can be contradicted with the concept of comparative advantage, which in description means the ability to produce specific goods at a lower opportunity
It is suggested by many that there are two ways for a business to gain competitive advantage; this is done through either cost advantage or differentiation. Porter (2004, p.64) claims that cost advantage is when a “firm achieves a lower cumulative cost of performing value activities than its competitors”. A good example of this would be ASDA within the food retailer industry. ASDA (ASDA beats its full year sales and profit plan, 2009), known for their “commitment to everyday low prices”, are very much a cost-leading competitor in the food retailer industry and they stated that they beat their “full year sales and profit plan” for the fourth consecutive quarter in 2009 by introducing a “significant cost reduction prog...
A comparative advantage occurs when a country takes the least amount of time for the certain good/service to be produced when compared to other countries. When the United States is compared to countries A (Developing) and C (Developed), it has the comparative advantage when concerning the agricultural products of corn and citrus (Table One). The United States has the
They have three characteristics: they contribute to superior customer value, they are difficult for competitors to imitate, and can be used in variety of ways. Distinctive capabilities can lead to a competitive advantage. Any major value-creating capabilities organizations have that are essential to their business are core competencies. Although an organization’s capabilities are the source of its core competencies, the core competencies also contribute to improving and enhancing other organizational capabilities. Every organization has processes and routines to get work done. Any core competencies of an organization are created out of these routines and processes, accumulated knowledge, and actual work activities. If core competencies are established, they can, in turn improve and enhance other organizational capabilities and contribute to developing distinctive capabilities, which is what leads to competitive advantage. Past performance trends is one criterion that could be used to determine strengths and weaknesses. Looking at the trends could assess any organizational area that is measurable. Another criterion is how actual performance measures up against specific performance goals. Comparison against competitors will let the organization know how they stack up against those with whom they are competing for consumer dollars.
We can define competitive advantage as simply what a given company excels best at. This could be the distinguishing factor as to why consumers purchase from your company and not the competition. This could also be understood from the perspective of quality that a business can create for the consumer.
Pricing. Our product is priced lower than our competitors in our industry. Even though our competitors have a different kind of product compared to us.
Competitive advantage is when a company or country can produce a product or services at the lowest opportunity cost compare to their competitor. Meanwhile, outsourcing is when one company outsourced their portion of work or job to another company that are more expert and experienced to handle the task and also almost every large company outsources their portion of work or job in order to gain competitive advantage.
of a firm to attain new forms of competitive advantage (Müller, 2011). It is due to these
Comparative advantage means that an industry, firm, country or individual are able to produce goods and services at a lower opportunity cost than others which are also producing the same goods and services. Also, in order to be profitable, the number in exports must be higher than the number in import. From the diagram we seen above, Singapore is seen to have a comparative advantage in some services. The services are Transport, Financial, business management, maintenance & Repair and Advertising & Market Research, etc. These export services to other countries improve the balance of payment. On the other side, Singapore is seen to have a comparative disadvantage in some services. The services are Travel, Telecommunications, Computer & Information,
A sustainable competitive advantage is making your company have a unique value position, in a competitive environment, while defending the supported proposition. These advantages need to be constantly updated in order that the competitors remain on the back foot. Unable to keep abreast of the shifting advantages and the difficulty to imitate or implement changes that take place. Such properties of sustainable competitive advantages that can be changed, include;
Competitive strategy is the approach that an organisation takes in order to gain advantage over its competitors. According to Porter, there are two major sources of competitive advantages: costs and differentiation. Cost-based competitive advantage involves reducing production costs so that an organisation can earn higher profit margin or offer products at lower price compared to competitors. Differentiation-based competitive advantage involves offering unique properties that are not offered by competitors’ products. Differentiation allows an organisation to charge a premium for their products because they offer additional benefits to buyers.