A competitive advantage is an advantage in some way that has a company to other companies in the same sector or market, and allowing you to have a better performance than the companies and thus a competitive position in the sector or market. Some areas in which a company could have a competitive advantage are the product, the brand, customer service, production process, technology, personnel, infrastructure, location, distribution, etc.
For example, a company might have a competitive advantage in the following cases:
- To have a single innovative product and difficult to imitate by competitors, which allows you to differentiate or distinguish this.
- To have a valuable brand that allows that any product entering the market has a good reception.
- To have an efficient production process that enables it to produce the same products from the competition, but at a lower cost.
- To have a technology that allows it to produce products with better performance than the competition.
- To have highly qualified staff that allows you to have high productivity and provide excellent customer service.
- To have a patent that allows you to exploit a particular product without worrying about competition will too.
- To have an information system that lets you take and quickly process customer orders, and thus provide quick attention.
- To have a modern infrastructure that allows employees to work and customers are served in a comfortable and welcoming atmosphere.
- Having a strategic location that allows its clients to easily locate and visit them, or that their suppliers to supply them promptly.
- To have an efficient distribution system that allows their products reach various points of sale, in good condition and in a timely manner.
A company may have different advantages in different aspects to other competitors, but for a benefit to be considered as competitive, it must meet the following requirements:
- Allow better performance: should allow the company to perform better than the competition; for example, increased sales, higher profit margins, a greater number of loyal customers, etc.
- Allow an increase in profitability: should allow the company to have an increase in profitability that at least reaches placed above the average profitability of the sector or market.
- Be sustainable over time: it should be able to stay in the medium or long term; for example, a technology able to adapt to market changes and not one that will shortly become obsolete.
- Be elusive or even: to be elusive or even by the competition; for example, a product difficult to imitate by competitors due to its unique components.
The idea of the concept of competitive advantage is that a company must constantly seek obtain, maintain that or those who already have, and make the most of, if you want to achieve a better performance than other competing companies, and thus have a position competitive in the sector or market. There are several ways to gain a competitive advantage, but the two main ones are looking for a cost leadership (a comparative advantage or cost advantage), and seek differentiation (a differential advantage):
- Find a cost leadership: is to seek to have the lowest costs in the market (for example, creating more efficient processes or simplifying product design), in order to offer lower prices than the competition's prices.
- Seek differentiation: is looking to offer something unique, original and novel (eg, a product with improved performance and greater durability than the other) in order to differentiate or distinguish themselves from the competition.
To become and remain competitive, a company must constantly seek a competitive advantage, even when already own one or more than one; but also be aware of that or those that already have competitive advantages, strive to maintain and take full advantage. Maintaining a competitive advantage could mean that advantage to strengthen it more lasting and meaningful; for example, if a company's competitive advantage your sales force, keeping it could mean finding new and better ways to train them.
While maximize competitive advantage could mean attempt to obtain the maximum benefit from this; for example, if a company has a competitive advantage an alliance with a strategic partner, make the most could mean seeking new agreements with such partner; or if you have a competitive advantage to its distribution system, make the most of it could mean using the system to sell other complementary products already sold.
Finally, take advantage of a competitive advantage it could also mean convert that advantage into a business opportunity; for example, if a company's competitive edge knowledge and technology needed to produce a product that already exists in the market, but with higher quality, make that advantage could mean that product to the market launch.
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