Sustaining Competitive Advantage
Competitive advantage refers to the point that a business wants to reach to gain more profit than its competitors. The sustainable competitive advantage of a business is the long-term favorable position to boost image in the competitive market, earning potential and valuations. Through competitive advantage, a business communicates greater perceived value for a target market than its competitors (Rouse, 2012).
A business can gain competitive advantages by offering quality products, increasing market efforts, and lowering product/service prices (Rouse, 2012). According to Anna (2013), six key sources of competitive advantages are skilled and experienced people, effective organizational culture and structure, process and practices, products and intellectual property, technologies, capital, and natural resources. According to Keegan (2014), two key sources of competitive advantages are external sources of changes and internal sources of change that are outlined in the diagram below:
Diagram: The emergence of competitive advantage Source: Keegan (2014)
According to Horstmann (2017), to determine competitive advantage it is first essential to define sources of competitive advantages. There are three key types of competitive advantages that are price, product, and customer services. After defining the competitive advantages, businesses need to pick one advantage to be exceptional at it. Then, it is essential to build up strategic alignment across the business operations by ensuring that every individual understands these advantages. After selecting the competitive advantages, businesses need to validate them by the marketplace. In this case, businesses should be aware of false differentiation, uneconomic differentiation, and unsustainable differentiation. Businesses also need to focus on customer sight and market values to ensure competitive advantages. In addition, organizations can do revenue growth diagnostic tests to ensure realistic revenue goals, and to rate themselves against the sales and marketing strategies of competitors.
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For delivering on competitive advantages, businesses need to do a strategic alignment with the functions in the organizations so that every function can understand the advantage and their role in delivering the advantage. If businesses can effectively define their competitive advantage, their customers are willing to pay for it that cannot easily be imitated by the competitors (Pearson, 2010). An organization can follow a number of ways to ensure delivering on its competitive advantages. First, the organization can develop functional strategies for delivering on its competitive advantages. Second, the organization can maintain communication and cross-functional alignment across the differentiators. Third, strategies should be aligned with the marketplace and should validate competitive advantages (Horstmann, 2017).
In a word, businesses must ensure that what they are offering better than their competitors. Otherwise, businesses will fail to gain revenue growth objectives. Therefore, businesses must determine their competitive advantage and have to validate in the market to ensure delivering on its promise.
Anna, M. (2013) 6 Sources of Competitive Advantage. Available at: https://business.simplicable.com/business/new/6-sources-of-competitive-advantage. [Accessed on 10 January 2018]
Horstmann, J. (2017) 3 Tips to determine your competitive advantage. Available at: https://salesbenchmarkindex.com/insights/3-tips-to-determine-your-competitive-advantage/. [Accessed on 11 January 2017]
Keegan, T. (2014) Influencing Organizational Strategy. Edinburg: the University of the West of Scotland
Pearson, G. (2010) Strategic Thinking. 2nd Ed. Harlow: Prentice-Hall.
Rouse, M. (2012) Competitive Advantage. Available at: http://searchcio.techtarget.com/definition/competitive-advantage. [Accessed on 12 January 2018]
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