Marketing

Managing Competitive Advantage

Main Concept

When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage.

Competitive advantage management is a set of methods and strategies that work to not only position your company or business but also make it stand out in the market. Understanding the competitive advantage of your company over its rival companies is the key to creating a dominant position in your market. The business plan that you have sketched as an outline of the future progress of your business should incorporate competitive advantage management. Without it, your business plan is incomplete and will be ineffective as well. 

Importance

Competitive Advantages are very important because they can ensure that a company earns excess returns for a longer period of time.  By increasing the life of a company, the value of the stock is enhanced. Competitive advantages don't just come in one form.  Also, companies can have multiple competitive advantages; in fact, the more the merrier. 

Here are some of the competitive advantages:

Differentiation

In a Differentiation Competitive Advantage a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.

Creation of new devices, objects, ideas, or procedures useful in accomplishing human objectives.

The companies must capitalize the human assets by unlocking their expertise to get new ideas from supplier, employees, customers and other companies. The results of this process lead your company to dominate by producing new products and services to the customers. Company can’t depend on one product all the time if this is...