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Competitive Advantage

The document discusses the concept of competitive advantage and how it provides firms with a superior position over competitors. It provides examples of competitive advantages through flexibility, standardized products, and after-sales service. It also discusses how competitive advantage is built through superior quality, innovation, customer responsiveness, and efficiency.

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Nishkam Choudhry
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© Attribution Non-Commercial (BY-NC)
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92 views20 pages

Competitive Advantage

The document discusses the concept of competitive advantage and how it provides firms with a superior position over competitors. It provides examples of competitive advantages through flexibility, standardized products, and after-sales service. It also discusses how competitive advantage is built through superior quality, innovation, customer responsiveness, and efficiency.

Uploaded by

Nishkam Choudhry
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Competitive- Advantage

Competitive- Advantage
Concept
• A competitive advantage is a position of
superiority on the part of firm in some
function/ factor/ activity in relation to its
competitor.
• Simply it is advantage a firm has over
competitors.
• It can be in marketing, production,
finance, resources, capability, technology.
Competitive- Advantage
• It refers to the edge a firm has over
rivals .It can be due to high brand visibility,
dominant market share, capability to make
products at lower cost or higher value.
• Competitive Advantage provides potential
for earning superior benefits.
• Competitive advantage may be sustained
for a firm to enjoy superior profits, When
firm invest in resources that generate
advantage, firm maintain its leadership
position.
• Intel invests approx 15% of its sales
revenue each year on R & D to remain
technological leader in microprocessor.
Example
• Toshiba of Japan have flexible manufacturing system
(F.M.S), It has variety, speed and quicker response to
market demand. It manufactures different products/
variety of same products on same assembly line.
• Its computer factory assembles 9 different word
processors on the same line.
• It is able to switch from one product to other quickly at
low cost.
• This flexibility allows Toshiba to meet fast changing
market demand.
Example
• Sony has cost advantage in personal
stereo players. It comes from globally
standardized product.
Continue….
• Competitive advantage of Caterpillar is in
its business of earth moving equipments
through after sales service.
Building Block of Competitive
Advantage
Superior
Quality

Competitive
Advantage Superior Customer
Superior Efficiency Responsiveness
• Low cost
• Differentiation

Superior innovation
1. Superior Quality-.
• Brand reputation
• Reliability of the product
2. Innovation-
• Advances in product, process system
and marketing strategies.
3. Customer responsiveness-
• To identify customer need and satisfy
them timely.
• It creates positive customer response
4. Superior efficiency-
• It means conversion of input raw material
to output finished goods in a better way.
Resources Build

Distinctive
Shape Strategies Competitive Superior
Competencies
Advantage Profitability

Build
Capabilities
Efficiency and Competitive
advantage
Low output
Better Efficiency Higher profit margin Better
BetterRR&D
&D
cost

Better Quality
Higher
Better Competitive Customer
Advantage Response
Innovation
Competencies
• The strengths of a business in any of the
functional area.
• A Core competence is something a
company does well relative to other
internal activities.
• Example- Nokia- fast development of new
products.
• Apple-Innovativeness in product features.
• Tata- Diesel Engines.
• Without competitive Advantage a firm cannot put in
place the chosen strategy.
• The implementation of strategy and achieving the
objective is imaginary if companies don’t have
competitive advantage.
• Competitive Advantage helps firm to move in right
direction.
• Competitive advantage is essential to face the
competitive challenges.
• With the help of competitive advantage firm capitalize
opportunities and combat the threats in environment.
Strategy and Competitive
Advantage
• Strategy is a set of decisions and actions that
managers make and take to attain superior
company performance relative to its rivals.
• Strategy guide managers to allocate resources
in a way to endow the firm advantage over
rivals.
• Effective and strong market position gives firm a
price advantage. It means ability to charge
higher price.
Strategy and Competitive
Advantage

Competitive Performance
Strategy
Advantage profitability

Feedback
Competitive advantage and
Strategy
• Without a relevant competitive advantage
a firm cannot place a strategy.
• Competitive strategy makes the strategy
work.
• By effective strategy a firm gains
competitive advantage, by putting the
competitive advantage in use a firm
operates its strategy.
Competitive Advantage Factors

• In Marketing
• Market share
• Innovation in marketing
• New product Leadership
• Price leadership
• Advertising Effectiveness
etc.
In Finance
• Assets
• Liquidity
• Cost of capital
• Cost
• Profitability etc
In R & D
• Resource allocation to R & D.
• Speed of R& D.
• R & D investment
etc.

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