Competitive Advantage

Competitive advantage is the favorable position an organization seeks in order to be more profitable than its competitors.

Without sustainable competitive advantage, your organization will always be vulnerable. Imagine you run a pizza restaurant in a small town, where you share the market with two competing pizzerias. You decide to win more business, so you differentiate yourself by offering a home-delivery service. Within a month your turnover has doubled: you have achieved competitive advantage. But seeing your success, your competitors also start to offer delivery and within another month, your sales have returned to their previous levels.

The problem is that this competitive advantage was just temporary. To be sustainable, competitive advantage needs to be difficult or impossible to copy. In this example, this could mean investing more expensive premises - located between the shopping center and the cinema, say - that a large number of people will pass by. Your rivals cannot occupy the same site, so you have a sustainable competitive advantage over them.

What are the potential sources of sustainable competitive advantage that your organization should seek to develop? Location is clearly key in the retail sector, but sources of sustainable competitive advantage can be identified in every industry:

Size: being bigger gives you control of the market and achieves economies of scale.

Knowledge: a big-city law firm, for example, may have more knowledge than a smaller firm.

Resources: control of limited resources of any kind.

Relationships: key relationships with decision-makers cannot be easily coped by your competitors.

Brand: while it is easy to copy a product, it is difficult to copy the emotions customers feel about a particular brand - that's why organizations invest so heavily in brand identity.

“AN ENTERPRISE THAT IS CONSTANTLY EXPLORING NEW HORIZONS IS LIKELY TO HAVE A COMPETITIVE ADVANTAGE IN ATTRACTING AND RETAINING TALENT.”

GARY HAMEL

“CONTROL YOUR EXPENSES BETTER THAN YOUR COMPETITION. THIS IS WHERE YOU CAN ALWAYS FIND THE COMPETITIVE ADVANTAGE.” SAM WALTON

“THE INFORMATION THAT IS PASSED FROM PERSON TO PERSON AND FROM GENERATION TO GENERATION IS THE PRIMARY FACTOR THAT GIVES HUMANS A COMPETITIVE ADVANTAGE OVER OTHER ANIMALS.”

KEITH HENSON

Запоминаем:

сompetitive advantage - конкурентное преимущество

sustainable - устойчивый, поддерживаемый

vulnerable - уязвимый

competing - конкурирующий

turnover - оборот

temporary - временный

premises - помещение

rival - конкурент

size - размер

scale - масштаб