Competitive Advantage is a key business concept that refers to the unique ability of a company to outperform its industry rivals. It is achieved through various strategies identified by Michael Porter, a foremost authority in strategic management. These include cost leadership, differentiation, and focus. Cost leadership involves the production of goods or services at a lower cost, granting higher profit margins. Differentiation, on the other hand, entails offering unique products or services that stand out in the market. Lastly, the focus strategy targets specific market segments to optimize resource utilization. Factors internal to a company, such as positioning, corporate identity, and core competencies, also contribute to competitive advantage. However, advantages can sometimes be classified as unfair if they grant benefits to a business that are not accessible to others, hence disrupting market fairness. Government bodies often intervene in such cases to maintain fair market dynamics. Furthermore, the resource-based view of a firm and its capacity for innovation are other key determinants of competitive advantage.
In business, a competitive advantage is an attribute that allows an organization to outperform its competitors.
A competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skilled labor, geographic location, high entry barriers, and access to new technology and to proprietary information.
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