The Nature of Competitive Advantage

Topics: Strategic management, SWOT analysis, Marketing Pages: 17 (4481 words) Published: August 13, 2010



a. Socio-Cultural/demographic issues affecting business. b. Technological Factors
c. Economic factors
d. Political and legal factors
e. Physical/Environmental Factors


a) A Model For Industry Analysis- Porter’s Five Forces b) Rivalry
c) Threat Of Substitutes
d) Buyer Power
e) Supplier Power
f) Barriers to Entry / Threat of Entry
g) Generic Strategies To Counter The Five Forces


a) SWOT Analysis
b) Internal Marketing
c) Conducting a SWOT Analysis
d) Resources
e) Capabilities

a) The Final Steps


The Nature Of Competitive Advantage

Almost everyone in business understands the principle of trying to offer something better than what their competitors are offering. Gaining an advantage is the key to success and even survival. But many of the so-called advantages that businesses rely on are not sustainable. They can be easily copied, stolen or negated. Real competitive advantages — things like brand name recognition, patented manufacturing processes or exclusive rights to a scarce resource — cannot be easily copied. Every company has a unique set of strengths, and it's critical that you determine yours, as well as your competitors'. Knowing your SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis helps you to see how your strengths stack up against your competitors' weaknesses and suggests ways to take advantage of marketplace opportunities. Have you ever made the wrong decision because you had inadequate information? Have you ever found yourself falling behind the competition and wondering how it happened? Have you ever wondered if there were new markets, sales channels and breakthrough communication programs that could take your product to the next step in sales and profits? If so, you need competitive intelligence (CI). Many managers will argue they have plenty of information about their industry, competitors, customers and marketplace. More often times they are wrong. Knowing what is going on in the marketplace and how it will impact you is the key to market leadership. This knowledge will help your firm become a strong competitor and seize the market first. Therefore this paper seeks to outline factors interlinked to Competitive Advantage in business which are the process of External Analysis, Identification Of Industries Opportunities And Threat, Internal Analysis, Resources-Capabilities. DEFINITIONS:

There are as many definitions of Competitive Advantage but commonly accepted variations include: • ‘a firm has a lower cost structure that a rival and so can sell at a lower price of make a bigger profit at the same price. – R. Hayes • Advantage, benefit, PROFIT all means something that is of use or value. ADVANTAGE is anything that places one in an improved position, esp. in coping with competition or difficulties. • ‘SWOT is an acronym used to describe the particular Strengths, Weaknesses, Opportunities, and Threats that are strategic factors for a specific company. -Wheelen, Hunger pg 107 • Internal Analysis- Analysis of strengths and weaknesses focuses on internal factors that give an organization certain advantages and disadvantages in meeting the needs of its target market. • External Analysis - examines opportunities and threats that exist in the environment. • Resources - Something that can be used for support or help: An available supply that can be drawn on when needed. The ability to deal with a difficult or...
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