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9 Creating Competitive Advantage

The document discusses competitive advantage and strategies for achieving it. It defines competitive advantage as an attribute that allows a company to outperform competitors and achieve superior profits. It then provides examples of competitive advantages like access to resources or technology. There are three main strategies discussed: cost leadership through low costs, differentiation by delivering unique value, and focus on a narrow target market segment through low costs or differentiation. The importance of having a competitive advantage is emphasized as it distinguishes a company and contributes to business success.

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Jay Lopez
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85 views11 pages

9 Creating Competitive Advantage

The document discusses competitive advantage and strategies for achieving it. It defines competitive advantage as an attribute that allows a company to outperform competitors and achieve superior profits. It then provides examples of competitive advantages like access to resources or technology. There are three main strategies discussed: cost leadership through low costs, differentiation by delivering unique value, and focus on a narrow target market segment through low costs or differentiation. The importance of having a competitive advantage is emphasized as it distinguishes a company and contributes to business success.

Uploaded by

Jay Lopez
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
Download as pdf or txt
Download as pdf or txt
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Technopreneurship 101

Creating Competitive Advantage


What is a Competitive Advantage?

A competitive advantage is
an attribute that enables a
company to outperform its
competitors. This allows a
company to achieve
superior margins compared
to its competition and
generates value for the
company and its
shareholders.
Examples of Competitive Advantage

1. Access to natural resources that are restricted


from competitors
2. Highly skilled labor
3. A unique geographic location
4. Access to new or proprietary technology Ability
to manufacture products at the lowest cost
5. Brand image recognition
Constructing a Competitive Advantage

1. Benefit: A company must be clear what benefit(s)


their product or service provides. It must offer real
value and generate interest.
2. Target Market: A company must establish who is
purchasing from the company and how it can
cater to its target market.
3. Competitors: It is important for a company to
understand other competitors in the competitive
landscape.
Strategies for Competitive Advantage
Strategies for Competitive Advantage

#1 Cost Leadership

In a cost leadership strategy, the objective is to


become the lowest-cost producer. This is
achieved through large-scale production where
companies can exploit economies of scale.
Strategies for Competitive Advantage

#2 Differentiation

In a differentiation strategy, a company’s


products or services are differentiated from that
of its competitors. This can be done by
delivering high-quality products or services to
customers or innovating products or services.
Strategies for Competitive Advantage
#3 Focus

In a focus strategy, a company focuses on a


narrow target market segment. This strategy is
successful if the company is able to successfully
create products/services that can cater to these
customers. The focus strategy also has two
variants:

Cost-focus: Lowest-cost producer in a narrow


market segment
Differentiation-focus: Differentiated
products/services in a narrow market segment
Competitive Advantage in the Marketplace
Examples:

1. McDonald’s: Cost Leadership Strategy

2. Louis Vuitton: Both differentiation and a


differentiation-focus strategy

3. Walmart: Cost leadership strategy.


Importance of Competitive Advantage

A competitive advantage distinguishes a company from


its competitors. It contributes to higher prices, more
customers, and brand loyalty. Establishing such an
advantage is one of the most important goals of any
company.

In today’s world, it is essential to business success.


Without it, companies will find it difficult to survive.
Think Q!

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