How does business level strategies can be a source of competitive advantage?
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts Show
Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles Update Competitive advantage, as the name implies, is an advantage that a company or market participant has over other competitor market participants in a given function or industry. Plainly stated, it concerns the ability of a company to better provide a value proposition to consumers than competitors who provide the same or a similar value proposition. Back to: Entrepreneurship Back to: STRATEGY & PLANNING What are Types of Competitive AdvantageCompetitive Advantage can be divided into two based on an analysis by Michael Porter. These two types can be further divided into two or three based on market segmentation.
The competitive advantage concept was developed by Michael Porter in 1980. This aspect was developed to deal with the issue of comparative advantage and absolute advantage which advised countries to produce only what they are good at. Comparative advantage could see countries only engaging in primary sector production which could lead to low wages and little wealth generation. How Does Cost Leadership Lead to Competitive AdvantageA company is said to have cost advantage if it produces goods more efficiently with less costs than do competitors. Cost leadership strategy will be advised when:
Competitive advantage in costs come experience which is linked to learning:
How Does Product Differentiation Lead to Competitive Advantage?A company is said to have competitive advantage in product/service differentiation if it offers goods/services of better value/quality or with better attributes than those of competitors. In such a case, customers are willing to pay more for the goods/services. The more the sophistication of a product, the more the positive attributes, the better the competitive advantage in product differentiation. Product differentiation comes in handy when:
What are the Sources of Product Differentiation?
How Does Market Focus Lead to Competitive Advantage?The idea behind market segmentation is enable companies to learn the behavior of consumers when they are creating products or services. It tries to get companies to focus on selected markets instead of targeting all markets. Companies that target specific markets are able to meet the needs of their customers and this gives them a competitive advantage. To do this, most companies allow consumers to participate in the creation of products or services. What are the Drivers of Competitive Advantage?Competitive advantage generally arises in the following contexts:
What are Examples of Competitive Advantage?Examples of factors producing a competitive advantage include:
The important thing to note about competitive advantages is that they are rarely sustainable. That is most competitive advantages provide only a temporary benefit over other competitors. In any event, the effect of the above attributes or resources is to effect the power struggle between the forces identified by Porter. Some of these attributes or resources are sustainable and others are not. Strategic Management and Competitive AdvantageStrategic management is largely concerned with competitive advantage. That is, the strategic manager will plan and implement a strategy that seeks to establish, maintain, or grow the business's competitive advantage. The objective or intended result of those decisions are to exceed the profits or incur less loses than competitors. Sustained Competitive Advantage and StrategyMarkets are, by nature, competitive. Sustained competition tends to erode any advantage that one market participant has over others. This may happen because competitors copy the advantaged competitor, or the competitors create their own unique competitive advantage that outpaces others. So, competitive advantage is generally limited in time. Managers seek to maintain, establish new, and increase competitive advantage through strategic planning. This requires the manager to constantly assess the company, the value proposition, the market, the competitors, and the customer. The manager must develop new objectives, value propositions, and methods. What is business strategies for competitive advantage?Building a Competitive Advantage
Michael Porter, the famous Harvard Business School professor, identified three strategies for establishing a competitive advantage: Cost Leadership, Differentiation, and Focus (which includes both Cost Focus and Differentiation Focus)[1].
What can be sources of competitive advantage?Sources of Competitive Advantage. Product Attribute Differentiation. One way to gain an advantage over competitors is by differentiating your product from theirs. ... . Customers' Willingness to Pay. ... . Price Discrimination. ... . Bundled Pricing. ... . Human Capital.. |