In the modern competitive markets, Competitive advantage is the core of a firm’s performance. Competition is the driving feature that controls the success and failure of business firms. The appropriateness of the activities of the business s firms than can add to it performance such as a cohesive environment, better strategy implementation or innovations is determined by the competition that the firm is into. However a competitive strategy is formulated my firms and industries so as to understand the fundamental arena of their competitive position in the industry. The competitive strategy of the firms concentrates on developing a profitable and sustainable position of the firm against the factors that decide industry competition.
By proper implementation of the competitive strategies, the firms in any industry can achieve a sustainable competitive advantage. A competitive advantage is a business concept that describes the attribute of allowing a firm to outperform its rivals. Brand loyalty or customer preference for a particular product is the effect of competitive advantage. (Porter, 1985) It is a situation when a firm sustains profits that exceed the average of its industry over its rivals or the so called competitors. Competitive advantage has become the goal of many of the business strategies. A competitive advantage prevails when a particular firm either delivers similar benefits as compared to its rivals but at a lesser cost or provides the customers with benefits that exceed those provided by the competing products. A competit...
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... The second central question to frame a competitive strategy is the relative position of a firm in the industry. Any firm that positions itself well will be able to achieve high rates of return even though the industry structure might not be favorable thus attaining modest average profits.
Sustainable competitive advantage is the fundamental basis of above average performance in the long run. Although firms have a lot of strengths and weaknesses as compared to its competitors, there are two different types of competitive advantages a firm can have, namely low cost and differentiation. Cost advantage and differentiation play a vital role in helping the firm to cope up with the five forces better than its rival. These two types of competitive advantages when united with the scope of activities performed by the firm to achieve them lead to the three generic strategies.
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