Issues in Strategic Management

THE SOURCES OF COMPETITIVE ADVANTAGE
&
DIFFICULTIES IN MAINTAINING

In a competitive business environment, many businessmen keep in their mind a concept as “marketplace is battlefield, doing business such as fighting”. So what “weapons” does the firm use in that “battlefield”?. It is possible to say that competitive advantage is one of “weapons” helps the firm fighting effectively. To mention to the concept of competitive advantage, it is appropriate to start by distinguishing causes, characteristics and consequences. As it described “The causes: an appropriate application of the core competencies possessed by the enterprise and an appropriate positioning of the enterprise in the relevant industries or market segments. Characteristic: the ability to provide utility, or to satisfy, customers better than competitor can. Consequence: the ability to win market share or make higher profit than competitors” (White, p.269). A simply understanding. when a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. Michael Porter identified two basic types of competitive advantage: cost advantage and differentiation advantage (Porter, p.11). The firms need to understand the sources which bringing about its competitive advantage and then, have a strategy to maintain and develop its competitive advantage. It is one of the critical issues to ensure for the existence and development of the firm.
A competitive advantage exists when a firm is able to deliver the same benefits as competitor but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, competitive advantage enables the firm to create   a superior value for its customers and superior profits for itself.
The competitive advantage which the firm achieves through utilizing its resources and capacities that ultimately results in superior value creation. In order to... [continues]

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