Competitive Advantage
Competitive advantage is the edge that a company or organization has over its competitors. It is the ability to outperform other businesses or organizations in the same industry by offering lower prices, better customer service, emerging technology advances, faster turnaround times, higher quality products, and/or a unique product or service offering. In order for a business to be successful and remain competitive, they must gain a competitive advantage.
In todays increasingly competitive business world, companies are constantly looking for new opportunities to gain a competitive advantage over their competitors. Companies that have a competitive advantage have the ability to not only remain in the game, but gain market share, profits, and longevity in the industry. There are two primary ways for companies to gain and maintain a competitive advantage - cost leadership and differentiation.
Cost Leadership involves the company finding ways to produce the same good or service but at a lower cost than its competitors. This allows the company to either lower the price of their product or service, or increase their bottom line by increasing profits. Companies that pursue cost leadership need to ensure they have researched the price points of their competitors and create a price point that will allow them to gain market share.
Another way a company can gain and maintain a competitive advantage is through differentiation. Differentiation involves the creation of a unique product or service offering that is not offered by competitors. This unique offering can come in the form of new technology, enhanced customer service, ethical or environmental considerations, or one-of-a-kind convenience. Companies may also differentiate by creating a higher-quality product at a slightly higher cost that customers value enough to be willing to pay the extra money.
To achieve a successful competitive advantage, companies need to carefully assess the competitive landscape of their industry, research the strategies of their competitors, and analyze the market. Companies should also strive to innovate and offer unique solutions that set them apart from the competition. By understanding their competitive advantage, companies can focus their efforts to capitalize on their strengths and mitigate any weaknesses.
It is important for companies to realize that competitive advantage is not static, it is dynamic and constantly changing. As companies come up with an advantageous strategy, the competition usually follows suit, often not too far behind. Companies should also strive to be ahead of the curve and anticipate what their competitors may do to gain a competitive edge in the future.
Competitive advantages are essential to the survival and growth of any business. Companies that understand their competitive advantage and maximize their competitive strategies can not only survive but also thrive in their industry.
