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Understanding Competitive Advantage

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For many businesses across the world, one of the main challenges in remaining profitable is to have a competitive advantage over competitors. By definition, a competitive advantage is a condition (or set of conditions) that allow a business to produce goods or services at a lower price or by providing better benefits that can justify pricing higher.

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Understanding Competitive Advantage

  1. 1. Understanding Competitive Advantage WILLAH JOSEPH MUDOLO
  2. 2. Understanding Competitive Advantage For many businesses across the world, one of the main challenges in remaining profitable is to have a competitive advantage over competitors. By definition, a competitive advantage is a condition (or set of conditions) that allow a business to produce goods or services at a lower price or by providing better benefits that can justify pricing higher.
  3. 3. Willah Joseph Mudolo | 3 The presence of these conditions allows the business to have more sales or achieve better margins compared to other competitors in the industry. In many cases, competitive advantages can be traced back to a number of factors, including branding, customer service, costing, quality of offerings, intellectual property and distribution channels employed. In the long run, a firm's ability to sustain competitive advantages makes it difficult for competitors to attack the advantage. In business, the competitive advantage can be seen in two angles: • Comparative Advantage. Comparative advantage explains a firm's ability to produce a service or good more cheaply than others in the market. Given the option, many consumers will purchase the cheaper of two substitute products. Comparative advantage The presence of these conditions allows the business to have more sales or achieve better margins compared to other competitors in the industry. does not necessarily mean a better product; it means a firm can produce a product of the same value at a cheaper cost. • Differential Advantage. With differential advantage, a firm's products in the market are seen as different from competitors and can also be perceived as more superior as a result of, for example, better technology, a strong brand or highly- skilled personnel.
  4. 4. Willah Joseph Mudolo To learn more about this topic, visit the blog of .Willah Joseph Mudolo

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