Competitive Advantage.What is it really about?

“If a man would write a good book, preach a better sermon, make a better bread, make a better mouse trap, than his neighbor, though his house is in the wood, the world will make beaten paths to his door”- Abraham Lincoln.

Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices.

•       A firm has competitive advantage when it is able to create more economic value than rival firms.

•       Valuable resources which are difficult to copy can give a sustainable competitive advantage to a company.

For a resource to be able to contribute to a firm´s sustainable competitive advantage:

•       Value

•       Rare

•       Inimitable

•       Organizable

Valuable resources which are difficult to copy can give a sustainable competitive advantage to a company. Such resources are such as:

  Resources based

–      Access to unique raw materials or location

–      Access to license from regulatory authorities

–      Privileged access to information

Assets-based

–      Unique low-cost position owing to accumulated volume

–      Unique low-cost/quality position owing to proprietary process technology

–      Unique low-cost position owing to installed based

–      Control of distribution network

–      Well established brand/reputation

–      patents

Competences-based

–      Proprietary scientific/technological know-how

–      Superior ability to bundle know-how

–      Superior ability in management of critical processes

–      Superiority in time management

–      Faster product development

Customer loyalty

–      Product unique or more valuable

–      Brand

–      High switching costs

Positive feedbacks

–      Network externalities

Experience effects