COMPETITIVE ADVANTAGE ESSAY

Competitive advantage: What is the best way to create it?

Estefany P. Sánchez Méndez It is well known that competition in any an y kind of industry is constant and it is growing more intense and fierce. Conseuently! since a successful firm does not simply participate in an attracti"e industry! it also stri"es to generate more economic profits than the typical firm in its industry! it must #e aware of de"eloping competiti"e strategies. $he literature shows that industrial actors are #ecoming more professional! use outsourcing strategies and often glo#alize their approaches to #ecome more competiti"e% #ut it also points out that technological changes! the competition glo#alization and deregulation are re"olutionizing markets &Céspedes! '(()% *+a"eni! '(()% ,o"elock! '((-. /or this reason! companies should create competiti"e ad"antage since it is known that the larger is a firm+s added "alue! the greater is its potential for profit and  #ecause it will also allow them to #ecome a superior performer in its its market that not only has an attracti"e position! #ut also a uniue and hard to imitate strategy and resources. $he purpose of this essay is to show the literature re"iew a#out competiti"e ad"antage! showing how to create it. 0ut as it e1ists many ways of doing so! this essay will determine what is the #est way to create competiti"e ad"antage2 ad"an tage2 3s a hypothesis! competiti"e ad"antage cannot  #e created 4ust #y one way! rather there e1ist a num#er of options% howe"er! to create the #est one! companies ha"e to assess its own conditions and capa#ilities so as to find it. In order to support the hypothesis! this essay will show first! the concepts of competiti"e ad"antage. $hen! the importance of ha"ing it will #e displayed. 3fter focusing on what it is is needed to #e consider con sider #efore deciding the way of create it! this essay will present and assess the

ways of how to create competiti"e ad"antage. 3nd then! according to those ways it will pointed out what is the #est one to create it! so finally the conclusion will #e stated. Competiti"e ad"antage means that the total "alue of the company should #e higher than the competition and in that way! the firm should co"er three #asic aspects5 &' increase customer  #enefits% &6 reduce the firm+s cost% or &7 disco"er inno"ati"e transactions. &Porter! '(89. 3ccording to Matthyssens and :anden#empt &'((8 competiti"e ad"antage is related to the added "alue concept! which happens when the network of customers! suppliers! and complementors in which a company operates is #etter off with it than without it! meaning that the firm offers something that is as uniue as "alua#le in the marketplace. /urthermore! competiti"e ad"antage is when a product or #rand has a superior and strategic attri#ute which is different from its ri"als in a competiti"e market! namely it is in which a company is #etter than its competitors and thus is a#le to offer a higher "alue to its customers &Pfeffer! '((9. It is also a#out doing different things than the competitors on a day;to;day #asis! and can #e measured #y the customer willingness to  pay. @i"kin! '(((. *e/illippi! '((F. 3s it can #e shown! the literature shows that there are a num#er of wa ys that organizations can create a competiti"e ad"antage! #ut what is the #est way2 3ccording to @umelt! Schendel and $eece! '(()% Porter! '(8F it is worth considering that de"eloping it takes time! it is not con"enient trying to #e the #est in all the ways &low;cost! differentiation! and others! it is far #etter to focus

in 4ust one way of creating competiti"e ad"antage! since generally companies that do not do so! sadly do not attain to #e the #est in any aspect and it is easier to #e o"erpassed #y a competitor which is focused in that 4ust one aspect. /inally! there must #e taken into account! the analysis of the acti"ities that the compan y is a#le to perform such as5 the ones associated with the product+s characteristics! like dura#ility! uniue design% the ones associated with sales or de li"ery! like the ease of purchase! speed of deli"ery! a"aila#ility and terms of credit! uality of presale ad"ice% the ones associated with post; sale! such as customer training! consulting ser"ices spare parts! product warranties! repair ser"ice! compati#le products% the ones linked with ad"ertising! packaging! and #randing% or support acti"ities such as! hiring! training and compensation practices which can create a competiti"e staff to manage the added "alue. 0ut! more importantly! consider those acti"ities+ effects on relati"e cost and relati"e customer willingness to pay! since the firm can use this analysis! to generate and e"aluate options for creating competiti"e ad"antage. In doing so! the management team ha"e to disaggregate the company into parts! as well as craft a "ision of an integrated whole. &Slater! '((-% 0haradwa4! :aradara4an > /ahy! '((7. 3s it was shown throughout the de"elopment of this essay! one of the main concerning issues that a company ha"e! is creating competiti"e ad"antage. $o conclude! there can #e said that it could #e created through a num#er of options such as low;cost strategy! either "ertical or horizontal differentiation! segmentation! redesigning the "alue chain strategy of the compan y and some others. Bowe"er! there is not 4ust one way of creating the desired competiti"e ad"antage that could work for any kind of company! rather! companies ha"e to assess! indi"idually! its own  performance! capa#ilities! resources! market position! and its a#ility to perform the types of acti"ities descri#ed pre"iously according to its own reality! and conseuently find its own #est

way to create competiti"e ad"antage! that may #e 4ust one way such as low;cost;strategy! of a com#ination of two of them! like low;cost strategy and redesign of the "alue chain! and so forth.

References

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