These factors allow the productive entity to generate more sales or superior margins compared to its market rivals. Competitive advantages are attributed to a variety of factors including cost structure, branding, the quality of product offerings, the distribution network, intellectual property, and customer service. Advanced technology, patent-protected products or processes, superior personnel, and strong brand identity are all drivers of differential advantage. Some restaurants thrive because of their location. Competitive advantage is extensively used in many areas. A competitive advantage is, an attribute that a firm/ company possesses which enables it to outperform its peers. The development of new products, services and processes stem from new ideas, creativity and it has objective to provide unique product that fulfil the needs and wants of customers. Through these strengths and competencies, the business is able to distinguish its products and services, or considerably decrease its costs as compared to competitors. If you have a competitive advantage you might be able to charge high prices and still enjoy superior sales. For imperfect substitutes, like Pepsi versus Coke, higher margins for the lowest-cost producers can eventually bring superior returns. Sustainability in the context of a sustainable competitive advantage is independent with regards to the time-frame. Decrease the cost of delivered products or … What is Competitive advantage? Discuss the competitive advantage of Firm A over Firm B (and vice versa). Well our research shows that one of the most important sources of competitive advantage is your entire corporate learning strategy. higher profit margin, greater return on assets, valuable resource such as brand reputation or unique competence in producing jet engines. Quality: Customers are more attracted to products and services that are of excellent quality. either through lower cost offerings (cost advantage) or through product differentiation (differentiation advantage 1. It's the law of the business jungle. Ltd. Salient Features of the Indian Constitution, Monthly The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage. Access to natural resources that are restricted to competitors 2. In basic sense, a firm is a place where a product or service originates. Competitive advantages can be broken down into comparative advantages and differential advantages. There are two basic types of competitive advantage: cost leadership and differentiation. The term "competitive advantage" traditionally refers to the business world, but can also be applied to a country, organization, or even a person who is competing for something. 1. It only shows the firm can offer a product or service of the same value at a lower price. Therefore, achieving efficiency, quality, and innovation will lead to customer responsiveness, and finally company gain competitive advantage. 3. Efficiency: It is defined as the ability to achieve a high level of output from minimal input. The ecommerce platform has a level of scale and efficiency that is difficult for retail competitors to replicate, allowing it to rise to prominence largely through price competition. Customer responsiveness: This attribute is related to customer satisfaction through meeting the needs and wants of the business' target customers. Apple is famous for creating innovative products, such as the iPhone, and supporting its market leadership with savvy marketing campaigns to build an elite brand. Competitive advantage is extensively used in many areas. An effective competitive strategy will help a firm develop, enhance and exploit one or more competitive advantages. Civil Service India is a website dedicated to the Civil Services Exam. It is what makes the brand, product, or service to be perceived as superior to the other competitors. Will India benefit from Joe Biden as President of US? In cost leadership, a firm sets out to become the low cost producer in its industry. Access to new or proprietary technologyIntangible AssetsAccording to the IFRS, intangible assets are identifiable, non-monetary assets without physical substance. Introduction . A team of dedicated professionals are at work to help you! Innovative products and processes enable the firm to gain significant competitive advantage as it provides business with a position to sheen and stand out from rivals. Competitive advantage is the leverage a business has over its competitors. It could be your products, service, reputation, or even your location. Comparative advantage does not imply a better product or service, though. A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). The minimum efficient scale (MES) is the point on a cost curve at which a company can produce its product cheaply enough to offer it at a competitive price. “Life lessons that corona virus taught me”. 2. Customers seek products and services of a high calibre, at the lowest possible price to meet their needs, or solve a problem etc. High quality products and services will provide business with a point of differentiation, and therefore gaining competitive advantage. It describes how the choice of competitive scope, or the range of a firm's activities, can play a powerful role in determining competitive advantage. Firm Resources, Competitive Advantage and Sustainable Competitive Advantage. Increase the ‘utility’ of products and services without disproportionate increases in the cost of producing and delivering the same; ii. Current Affairs Magazine. A competitive advantage is a capability or position that allows you to outperform competitors. Highly skilled labor 3. Competitive advantage is an important parameter for firms operating in an industry. Competitive advantage is when your firm does (or has) something better than any other firm. Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself. Competitive strategyis the long-term approach firms use to gain a competitive advantage in the eyes of their target audience. A competitive advantage is simply a factor that distinguishes your business from others and makes customers more likely to choose your product over the competition. 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