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Advantage comes from understanding and exploiting the emerging competitive market patterns. There is scope for advantage based on:
Search/ scanning capabilities
Analysis/ interpretation capabilities
Risk taking capabilities
Change management capabilities
Ownership of/ access to required complementary assets/ capabilities
The ability to do this depends in turn on the effectiveness and integration of the appropriate key business activities and processes (distinctive capabilities/ competencies) which underlie cost competitiveness, quality, innovation, speed to market, network building, and customer intimacy.
Low cost/ differentiation may indeed be the proximate cause of CA but they cannot be the ultimate source.
Low cost positions, superior quality, speed to market, or whatever, must come from something or other the organisation has or does.
For example in Ricardo’s time the superior returns (CA) of some farmers indeed came from lower costs which derived ultimately from superior quality (ie more productive) land, a resource that was very hard to make more of!
Nowadays Nokia’s or Dell’s superior returns come ultimately from something similar, something (scarce and hard to make more of) which allows them to do things which enable them to offer a better ‘value for money’ proposition to consumers. But what things exactly?
Conditions for sustaining a competitive advantage