Competitive Advantage

Home Assignment Answers Competitive Advantage

The qualities which help an organization to beat the competitors refers to competitive advantage.

The organization is able to get higher margins as compared to other organizations in the market and creates a value for itself and its stakeholders.

It is very hard to imitate the competitive advantage. If someone is able to do so, it is not viewed as a competitive advantage.

Related Article: Porter’s Five Forces Model

Following are a few examples of competitive advantage:

  • Having an access of natural resources that the competitors do not have.
  • Trained and skilled labor
  • Access to an exclusive geographic location
  • Being able to manufacture goods at a low cost
  • Recognition of brand by the audience
  • Use of new and registered technology


When you are constructing a competitive advantage, consider the following points:

  1. Advantage: As an organization, you must know what are the advantages that are provided by your goods and services. Make sure your products give real value and create interest in the minds of the audience.
  2. Target audience: Analyze your customers who are purchasing products from you. After that, establish how can you provide the target audience with the products which suit their needs and preferences.
  3. Other market players: To remain intact in the market which is full of competition, learn to understand the mind set-up and perceptions of other market players (competitors).

Every organization must focus on these points and provide benefits to the target audience in such a manner that the competitors are not able to do the same.

In establishing a competitive strategy, every organization has to focus on three strategies. These are:

  1. Cost leadership
  2. Differentiation
  3. Focus (On both differentiation and cost)


Producing the goods at the lowest cost is the main aim of this strategy. How to achieve it?

Most companies do this by engaging in large-scale production and by manipulating economies of scale.

When a company exploits the economies of scale and manufactures the goods at the lowest possible prices that too without compromising the quality, it can fix a selling price that no other company in the market can imitate.

Therefore, whichever company adopts this strategy will be able to earn profits, the reason being the cost benefit over others.


Companies adopt this strategy to differentiate its products from others. How can it be done?

Companies do this by producing and delivering high- quality products to the consumers according to their needs and preferences or by creating unique and innovative products.

By adopting this strategy, companies get the benefit of setting premium prices for their goods.


The main objective of this strategy is to focus the products and services of a company in the direction of the targeted section of the market. To implement this strategy successfully, the customers must have different preferences and desires and the organization should be able to cater to such desires by creating the required products and services.

There are two elements of this strategy:

  • Cost- focus: Producing the goods at the lowest costs in a narrow section of the market.
  • Differentiation- focus: Differentiated goods in a narrow section of the market.

Competitive advantage helps in making a company different from others. It has many variants like higher prices, brand loyalty, and more consumers.

For the success and survival of every company, competitive advantage plays a vital role.

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