Competitive Advantages Last Forever

Though there is argument that no competitive advantage lasts forever, I think competitive advantages could be sustainable. It depends on circumstance.

A firm has a competitive advantage when it is able to create more economic value than rival firms (Barney and Hesterly, 2012, 28). Both external and internal factors have to be examined, as to choose and implement suitable strategies. If a firm’s strategies result in superior performance, it is said to have competitive advantage (Jones and Hill, 2013, 4). However, the competitive advantage gained by a firm will be identified and imitated by other firms, i.e. being eliminated over time.

A competitive advantage could be temporary or sustainable. The sustainability of competitive advantages depends on three factors: the rate of core competence obsolescence due to environmental changes, the availability of substitutes for the core competence, and the imitability of the core competence (Ireland et al. 2013, 67).

Low rate of core competence obsolescence due to environmental changes leads to long lasting competitive advantages. If the firm has built up brand loyalty or implemented differentiation, it is possible to achieve this low rate of obsolescence..

The second factor is the availability of substitutes for the core competence. If the firm has substitute(s) for its core competence, its competitive advantage could last longer. The famous 3M is an example of firm possessing this factor.

The third factor is the imitability of the core competence. If the product or service is difficult to be copied, due to its high cost or complexity to imitate, the firm could gain a sustained competitive advantage. For example, the high-tech electronic products of Apple are costly to imitate. If other companies want to copy them, they would have to invest a great deal in research and development, and it is difficult to copy them in short time.

It is hard to say whether how long a competitive advantage could last, but it is...