How can a business outcompete its competitors? What are the ways a business can achieve a competitive advantage? What are the sources of competitive advantage?
Examples of How Businesses Create or Achieve and Maintain a Competitive Advantage
1. Technology and Innovation: Businesses achieves competitive advantage through technology and innovation because such can improve their operations or allow them to have the capacity to develop better products or services.
2. Marketing: An effective marketing strategy is also one of the sources of competitive advantage? An established brand with a positive reputation has an advantage over smaller or newer competitors. Differentiation or positioning allows the business to define itself apart from its competitors. Price leadership also raises barriers to competition.
3. Human Resource Strategy: The workforce is at the core of any organization. Businesses that observe effective recruitment and hiring strategies that include an offer for competitive compensation packages can attract the best employees. Furthermore, those with relevant retention strategies can maintain these highly competent individuals.
4. Intellectual Property: Having ownership or control over patents, copyrights, trademarks, and/or trade secrets gives a business an exclusive right to monetize these intellectual properties. Note that IPs can be a source of direct revenues or can pertain to resources, capabilities, and identities that give an organization its uniqueness.
5. Economies of Scale: Another way to achieve a competitive advantage is through economies of scale. A bigger business can outcompete smaller ones because it has more resources and capabilities related to production, marketing, and distribution of their products or services.
6. Geographic Dominance: In certain circumstances, operating in a specific geographic market can give a business an edge over others. Note that this is especially true for local businesses operating in a local vicinity with laws or regulations favoring local enterprises. Consider Chinese firms and China as an example.
7. Access to Financing: The capability to finance new products or initiatives at improving operations of product development is another source of competitive advantage. For example, publicly traded companies have an advantage over private companies because they can raise funds through the stock market needed for expansion or continuous improvements.
8. Supply and Distribution Strategy: Exclusive agreements between a business and its vendors or suppliers means preventing competitors from developing a similar supply chain. The same is true for exclusive or better agreements with third-party distributors. Note that having a presence on key markets can improve further the distribution strategy of an organization.
9. Product Portfolio: Having a large product portfolio can also give a business a competitive advantage, particularly if these products complement one another. Consider Apple and Google as an example. Apple has products and services that complement one another, thus resulting in a sort of interdependence.
