{"id":8854,"date":"2023-12-04T15:05:07","date_gmt":"2023-12-04T09:35:07","guid":{"rendered":"https:\/\/businessjargons.com\/?p=8854"},"modified":"2023-12-04T15:05:07","modified_gmt":"2023-12-04T09:35:07","slug":"competitive-advantage","status":"publish","type":"post","link":"https:\/\/businessjargons.com\/competitive-advantage.html","title":{"rendered":"Competitive Advantage"},"content":{"rendered":"

Definition<\/strong>: Competitive Advantage, as the name signifies the upper hand of a business entity over its market rivals, which is the result of the company’s strategies and continuous efforts. It represents the combination of distinguishing features of the firm and its products, which has value to the target customers and are considered peerless by them.<\/p>\n

In finer terms, competitive advantage is what makes a firm lead or dominate the entire market<\/strong>.<\/p>\n

Therefore, we can say that a company possesses a competitive advantage when it provides the same value and benefits to the customers as competitors but relatively lower price i.e. cost advantage<\/strong>, or it offers products or services of higher value and benefits than competitors i.e. differentiation advantage<\/strong><\/a>.<\/p>\n

It indicates the ability of a firm in deploying organization’s resources in an effective manner, increasing customer value and improving market position.<\/p>\n

Capabilities and Resource<\/h3>\n

Basically, it is the competitive advantage which creates a difference between the ruling firm and the other firms in the market. It is concerned with the organization’s resources and capabilities (expertise) and its management.\"competitive<\/a><\/p>\n

So, if the resources and capabilities are valuable, rare, non-imitable and non-substitutable, then they create competitive advantage.<\/p>\n

Basic Building Blocks of Competitive Advantage<\/h3>\n

\"Basic<\/a><\/p>\n

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  1. Superior Quality<\/strong>: Quality means standard in the product and service as compared to other products and services of the same type. It is something that makes or breaks a company. It provides an edge to the firm over its rival sellers. When the company makes improvement in the quality of goods and services or provides the best quality products, it becomes unrivalled, as it provides maximum value and satisfaction to the customers.<\/li>\n
  2. Superior Efficiency<\/strong>: Efficiency refers to the firm’s capacity in increasing the level of production with the existing resources, so as to lower the cost per unit. When a firm gets success in attaining efficiency, it is able to deliver products at a lower price than its competitors.<\/li>\n
  3. Superior Customer Responsiveness<\/strong>: Customer Responsiveness can be understood as the firm’s potential in delivering customized and innovative products and services to the target audience at a reasonable cost. Competitive Advantage can be achieved by a company if they provide the customer the desired products and services at a low price.<\/li>\n
  4. Superior Innovation<\/strong>: Innovation implies the company’s capability in making changes in the already existing product and services, with new ideas. In business, innovation can be made in the products or processes.<\/li>\n<\/ol>\n

    Hence, when a firm has a competitive advantage its profitability and performance are greater than the normal profitability and performance of the companies operating in the same industry. So, it helps in getting more profit and generating a high return for its shareholders as compared to the competitors.<\/p>\n

    Sustainable Competitive Advantage<\/h2>\n

    Sustainable Competitive Advantage as its name suggests is the long term favourable condition wherein the company is in a superior position which is difficult to imitate or transcend, thus making the firm dominant in the market.<\/p>\n

    Factors Affecting Competitive Advantage<\/h2>\n

    As discussed, competitive advantage reflects the firm’s ability in generating super-profits, but there are certain factors which decide the sustainability of competitive advantage. These are:<\/p>\n

    \"factors<\/a><\/p>\n