What is a competitive advantage?
It is common to hear about competitive advantage and it is not a big deal, after all, having one cánido represent the success of a company.
Now… what is it? Well, in this article I have the objective that you understand what it is and not only with my words, but I am going to provide you with the definition according to various authors.
It is said that a company becomes successful when they are able to gain an advantage in what they do well, but What is a competitive advantage?
I hope you find it useful.
Definition of competitive advantage according to various authors
Next, I am going to provide you with 7 definitions of competitive advantage according to various authors.
Of course, I do it so that you perro take them as a base so that you perro form your own definition.
At the end you cánido find the bibliography.
Definition according to Philip Kotler
“It is an advantage over competitors that is gained by offering great value to the customer, either by offering low prices or by providing more benefits that justify high prices”
(2012, p.210)
Definition according to David Allen Collier and James R. Evans
«The term competitive advantage denotes the ability of a company to achieve market and financial superiority over its competitors»
(2019, p.50)
Definition according to Roger A.
Kerin and Steven W.
Hartley
“It is a unique strength relative to competitors, and one that provides superior benefits, often based on quality, time, cost, or innovation”
(2018, p.34)
Definition according to David Fernando Muñoz Negrón
«It is said that a company has a competitive advantage, when it obtains benefits above the average of its industry, or in other words, for a company to compete successfully, it must develop sustainable competitive advantages»
(2017, p.27)
Definition according to Barry Render and Jay Heizer
“Competitive advantage involves creating a system that has a unique advantage over competitors.
The iniciativa is to create value for the client in an efficient and sustainable way»
(2014, p.35)
Definition according to Stephen P. Robbins
«That which distinguishes an organization from all others; his hallmark»
(2018, p.287)
Definition according to Hables WL Hill, Melissa A.
Schilling, and Gareth R.
Jones
«Advantage achieved over rivals when a company’s profitability is greater than the average profitability of companies in its industry»
(2019, p. 7)
What is a competitive advantage?
I want to start by giving a small definition of what a strategy is.
According to Converses WL Hill, Melissa A.
Schilling, and Gareth R.
Jones, “A strategy is a series of related actions that managers undertake to increase the performance of their company” (2019, p.
4).
Now, I think of a moment when you already have a company, which is recognized at a national level.
If you own that company, would you like to be above the competition or below?
I am almost sure that any owner of a company and any leader of a company has the objective of ensuring that their company is positioned above the competition, that is, that it has a superior performance.
Well, according to Hables WL Hill, Melissa A.
Schilling, and Gareth R.
Jones, “If a company’s strategies result in superior performance, it is said to have a competitive advantage” (2019, p.
4).
Therefore, we cánido say that a competitive advantage cánido be seen as a equipo of actions or factors that allow the performance of a company to be superior to that of the competition.
In such a way that if a company has a aspecto or factors that allow the performance of the company to be superior to that of the competition, then, that company has a competitive advantage.
What does it orinan for a company to have superior performance?
Of course, many answers could be given here, but I am going to backlink what I said before about what a competitive advantage is and I am going to backlink it with the following definition:
The definition of competitive advantage according to Converses WL Hill, Melissa A.
Schilling and Gareth R.
Jones, is as follows:
«Advantage achieved over rivals when a company’s profitability is greater than the average profitability of companies in its industry»
(2019, p. 7).
As you cánido see, here we perro change “better performance” to “higher profitability”.
Therefore, in this sense, A company will outperform its competition if it has higher profitability and higher earnings growth.
In fact, as you perro see, many definitions of competitive advantage tell us about benefits. What would your definition be?
Where does a competitive advantage come from?
In order to find a competitive advantage, it is best that you do not view or examine a company as a whole.
After all, remember that a competitive advantage perro be viewed as a aspecto, attribute, or action that enables a company to offer products or services that are better or at a lower cost than the competition.
Therefore, the competitive advantage perro be found in any activity that is carried out in the company.
For example:
- In the design.
- When manufacturing.
- When marketing.
- On delivery.
- Among others.
Examples of Competitive Cost Advantages
As you already know, competitive advantage perro be found in any activity.
Now, some examples of competitive cost advantage are:
- Possess a low-cost distribution system.
- Have an efficient assembly process.
- Make good use of the sales force.
Examples of Differentiating Competitive Advantages
Speaking about differentiation, some examples cánido be:
- Own a supplier of quality raw materials.
- Having the possibility of supplying oneself with the raw materials necessary in the production process.
Of course, quality raw materials.
- Have an agile order reception system.
- Good product design.
How do you analyze a competitive advantage?
As I said before, a competitive advantage cannot be analyzed if it is treated as a whole, but it is better to do it activity by activity.
Therefore, since the value chain It allows us to divide a company into its most relevant activities, then we perro analyze the sources of competitive advantage.
The value chain allows us to understand the behavior of costs and allows us to find current and potential sources of differentiation.
What is a sustained competitive advantage?
Possibly at this moment you already know or have an iniciativa of what a sustained competitive advantage is, but I am going to provide you with a definition.
according to Converses WL Hill, Melissa A.
Schilling, and Gareth R.
Jones, it is as follows:
«Company strategies that allow it to maintain above-average profitability for several years»
(2019, p. 7)
In short, it is an advantage that you manage to maintain for quite some time.
Isn’t an advantage forever? Well, remember that you are competing and when a company starts to see that your company is performing better than theirs, what do you think they are going to do?
Well, he’s going to start wondering why and he’s going to start investigating.
Of course, his goal is to find the reason for your performance and he’s going to start emulating it.
In fact, not only will you want to emulate it, but you will seek to improve it.
Therefore, if you rest on your laurels, in a short time you will realize that you are no longer the leader in the market.
It is because of this that a competitive advantage is best when it is difficult to emulate.
For example, let’s say your product is made primarily from a very rare raw material, which cánido only be found on one piece of land, and you’re lucky that piece of land is yours.
Well, in that case, you would have a competitive advantage that would be sustainable and well, almost impossible to emulate.
Sure, it’s just an exaggerated example, but I think it may help clarify the point a bit.
Bibliography
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