competitive advantage

1597 words 7 pages
Competitive advantage(CA) is an advantage competitors gain by providing or offering customers or consumers greater value for their money through product and service differentiation or through lower prices. Maintaining competitive advantage is crucial to many businesses or organizations' success in order to survive in the market. Competitive advantage is characterized by superior performance which could be an attribute to outperform the competitors whether current or potential; or gaining a higher market share in a particular industry thereby ensuring market leadership; or ultimately, maximization of profit.(JOBBER 2010)
This essay will critically analyze how competitive advantage is created i.e. Porter's 3 generic
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Such company is said to be "stuck in the middle" and will compete at a disadvantage, leading to it having less profit than a rival company who adopts one of the generic strategies.(KOTLER and ARMSTRONG 2006). Also the quest of a single strategy may leave room for product weaknesses, customer needs being ignored and ultimately narrow the vision of the firm. But a study done by WRIGHT et al(1990) concluded that firms with combined strategies outperforms firms with specialized strategies.
In order to achieve a differentiated or cost leadership position, a firm has to comprehend the nature, characteristics and location of sources of CA. These sources arise as a result of attributes such as price, quality, creativity and innovation. The value chain is a way of locating the sources of CA. It is the set of activities that a company undertakes in order to perform its business.(PORTER 1985) The sources are Superior Skills and Superior Resources.
Superior Skills
These are the unique skills of key personnel that differentiates them from personnel of rival firms which results in the capability to execute functions more successfully than other firms. Superior innovative skills will result in better technology and innovation
Superior Resources
These are the substantial


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