Explain the concept of competitive advantage. Identify the four general ways to pursue a competitive advantage according to your text.
Competitive advantage refers to something that an organization does extremely well, a core competency that clearly sets it apart from its competitors and gives it an advantage over them in the marketplace. This concept is discussed further in Chapter 9 on Strategic Management. For
now, it is important to understand that competitive advantage is an ability to do things better than one’s competitors. When others cannot quickly copy or easily learn to do these things, the competitive advantage becomes more sustainable over time.
1. Competitive advantage can be achieved through costs—finding ways to operate with lower costs than one’s competitors and thus earn profits with prices that one’s competitors have difficulty matching.
2. Competitive advantage can be achieved through quality—finding ways to create products and services that are demonstrably of consistently higher quality for customers than what is offered by one’s competitors.
3. Competitive advantage can be achieved through delivery—finding ways to outperform competitors by delivering products and services to customers faster and consistently on time, and to continue to develop timely new products.
4. Competitive advantage can be achieved through flexibility—finding ways to adjust and tailor products and services to fit customer needs in ways that are difficult for one’s competitor to match.
Source: Management, 11th Edition - John R. Schermerhorn