In business, competitive advantage
involves having something your competitors
do not. It is a distinctive
feature that makes a business successful. Good competitive advantage has to be hard to copy, otherwise competitors will soon find a way to imitate
Simple competitive advantage
The simplest form of competitive advantage is merely the ability to charge less
than your competitors do for a particular product
A very powerful way to be distinctive
is through innovation
. This means you come up with new ideas. They could be -
It is important to protect innovation
- if you want it to last.
Good relationships with stakeholders
can give a company competitive advantage. Customers who are treated well will hopefully come back, suppliers that are treated well will supply
punctually. These relationships are known as a business' 'architecture
', and can be a powerful form of competitive advantage.
These relationships are often retained more easily when times are good than in times of hardship - for instance, Marks and Spencer had to pull out of relationships with UK suppliers to buy more cheaply in the Middle East when times were hard.
Business which have a particular reputation
have a powerful competitive advantage. If people associate you with a particular value
, you're onto a winner. Examples -
Reputation takes a long time to build, but is invaluable