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Date Submitted: 10/15/2015 07:35 PM
Competitive Advantage
Introduction to Competitive Advantage:
A Competitive Advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. The two types of competitive advantage an organization can achieve relative to its rivals: lower cost or differentiation.A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player.Competitive advantage is the ability to stay ahead of present or potential competition.
There are four Competitive Strategies:
* Cost leadership strategy:-The goal of cost leadership strategy is to offer products or services at the lowest cost in the industry. The challenge of this strategy is to earn a suitable profit for the company, rather than operating at loss and draining profitability from all market players. Companies such as Walmart succeed with this strategy by featuring low prices on key items on which customers are price-aware, while selling other merchandise at less aggressive discounts.
* Differentiation strategy:-The goal of differentiation strategy is to provide a variety of products, services, or features to consumers that competitors are not yet offering or are unable to offer. This strategy gives a direct advantage to the company which is able to provide a unique product or service that none of its competitors are able to offer. An example is Dell which launched mass-customizations on computers to fit consumers' needs. This allows the company to make its first product to be the star of its sales.
* Innovation strategy:-The goal of innovation strategy is to leapfrog other market players by the introduction of completely new or notably better products or services. This strategy is typical for technology start-up companies which often intend to "disrupt" the existing...