Trade between organizations is possible, when one organization is more efficient than another in the production of a commodity or provision of a service, but less efficient than the other organization in producing a second commodity or provision of a second service, then both the organization can gain by each specializing on the subject of advantage and exchange a part of the same with another organization subjected to disadvantage.
Trade between organizations is possible, even when one organization is less efficient than another in the production of both commodity or provision of both service. The organization will specialize in producing the commodity or provision of the service, with less disadvantage and exchange a part of the same with another organization subjected to more disadvantage.
A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices.
Comparative advantage can lead countries to specialize in exporting primary goods and raw materials that trap countries in low-wage economies due to terms of trade, but Competitive Advantage attempts to correct this issue by stressing maximizing scale economies in goods and services that garner premium prices
Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors by performing at a higher level than others in the same industry or market. These attributes can include access to natural resources, such as high grade ores or inexpensive power, or access to highly trained and skilled personnel human resources. New technologies such as robotics and information technology either to be included as a part of the product, or to assist making it.
A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player.
Successfully implemented strategies will lift a firm to superior performance by facilitating the firm with competitive advantage to outperform current or potential players.
Competitive advantage provides the understanding that resources held by a firm and the business strategy will have a profound impact on generating competitive advantage.
Business strategy is the tool that manipulates the resources and create competitive advantage, hence, viable business strategy may not be adequate unless it possess control over unique resources that has the ability to create such a unique advantage.
This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria.
This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value-added features provided for the consumer.
Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products.
Examples of Differentiation Strategy: Maruti Zen, WagonR, Swift, Desire
Example: Mobile service provider like, DOCOMO, providing calling dependent plan.
Though combination of both strategies was said to reduce competitive advantage but in the market of WAR, this is the strategy actually followed by all competitors can be called as Differentiation – Integration Strategy