The Strength of Competitive Analysis

Topics: Theory, Economics, Marketing Pages: 4 (913 words) Published: December 1, 2007

Competition Theories Compete

It is never doubted by academic circles and business environments that the strength of competitive analysis, if not the top, is one of the most important critical success factors in creating and managing marketing strategies. The way a business adapts to competitive environments, characteristic of its focus being self-centered, competitor-centered, customer-driven or market driven (Day and Nebugandi, 1994), will define its place in the complex marketing arena.

However, different theories of competition seem to compete in offering better explanations for key macro and micro phenomena. In this paper, we attempt to review the different perspectives on The Comparative Advantage Theory of Competition by Hunt & Morgan. As well as the new light that the theory brings to competition environment and its differences from the neoclassical competition theory, the limitations of the proposition will be discussed.

Comparative Advantage Theory of Competition (CATC)

Hunt and Morgan's CATC is drawn on the evolving resource-based theory of competition, the studies on marketing and industrial organization economics, the theory of competitive rationality form Austrian economists and the theory of differential advantage from marketing and economics. (Hunt, Morgan, 1995) The theory claims to bring a new explanation to the relationship between marketing strategies and economical theories.

The theory underlines the fact that the markets are always dynamic and suggests that there will be no economic growth if the market equilibrium is reached. Disequilibrium is accepted as a norm for CATC, as a result of which, continuous innovation and higher high quality of goods & services are produced. Firms struggle to achieve comparative advantages by optimizing their tangible and intangible resources in order to gain competitive advantage. In CATC-defined market, consumers'...
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