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by Laurus Nobilis
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Strategic Management

Definition of Competitive Advantage (I)

Competitive Advantage







Achieving the competitive position in the market is the goal of every performance based, market oriented company. But to achieve it is not that easy.


Posted: May 2012

What is the Competitive Advantage?

Today's marketplace is ultra-competitive, with a many competitors who fight for a bigger share of their industry. So, what can companies do in order to fight for their share?

They do have to completely change the way they think and act in the market. In the past, companies could be successful by creating a unique strategic position in the marketplace.

Today this is not sufficient enough. Competitors can easily copy the strategy of other company. Also, they could even do it better and with lower cost. To protect the market position the companies need also to execute well. They need efficient processes, continuously improving and cost efficient, unique strategic positioning and excellent execution. If a company accomplishes all, they will achieve the competitive advantage.


How to Achieve the Competitive Advantage?

So, the companies achieve competitive advantage by creating a unique strategic position in the marketplace and executing their strategy well. But to say something is easy. To achieve it is not that easy.

Definition of Competitive AdvantageAs already mentioned, the two components of competitive advantage are unique strategic positioning and excellent execution. To achieve both of these items takes a lot.

First, and above all, companies need to be flexible in their planning and quick in their reactions to change. They need a very good demand planning and flexible and agile supply chain. The planning should be done only based on wishful thinking, but also based on real world facts.

Second, they need to take advantage of all information that is available about their performance. In the past the analytics was difficult job, since computing power of legacy hardware was not that powerful. The employees used to work with old tools and methods. Today, the ERP system provides the integrated planning, execution and analysis across the organization.

Third, firms need to position themselves and then execute using the sum total of their organization - people, technology, processes, and culture. Combining all these synergy power is created. That power can contribute to creation of competitive position.


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