Competitive Advantage Sustainability

2014

Islamic University Of Gaza College Of Commerce , MBA program

COMPETITIVE ADVANTAGE SUSTAINABILITY

Prepared by : Khaled J. Abu-Sultan Introduced To: Prof.Dr. Majed Al-Farra

ID: 120120475

Introduction:

Nowadays, each private business is fighting to get the biggest Market share to increase its profitability as much as possible. Several studies and researches concluded that companies have to possess something called Competitive Advantage in order to save and expand its market share.

What is competitive advantage?

A competitive advantage is an advantage gained over competitors by offering customers greater value, either through lower prices or by providing additional benefits and service that justify similar, or possibly higher, prices. For growers and producers involved in niche marketing, finding and nurturing a competitive advantage can mean increased profit and a venture that is sustainable and successful over the long term. Essentially a competitive advantage answers the question, “Why should the customer purchase from this operation rather than the competition?” (Cole Ehmke,2008). … 1

What are the foundations of competitive advantage?

Barney, in his VRIO framework of analysis, proposes four questions to evaluate a firm’s competencies 1. Value: Does it provide customer value and competitive advantage? 2. Rareness: Do no other competitors possess it? 3. Imitability: Is it costly for others to imitate? 4. Organization: Is the firm organized to exploit the resource? If the answer to each of these questions is yes for a particular competency, it is considered to be a strength and thus a distinctive competence.7 This should give the company a competitive advantage and lead to higher performance.

Where do these competencies come from?

    It may be an asset endowment. It may be acquired from someone else. It may be shared with another business unit or alliance partner. It may be carefully built and accumulated over time within the...