Competitive advantage
From Wikipedia, the free encyclopedia
Competitive advantage is a position that a firm occupies in its competitive landscape.[1] A competitive advantage, sustainable or not, exists when a company makes economic rents, that is, their earnings exceed their costs, including cost of capital. That means that normal competitive pressures are not able to drive down the firm's earnings to the point where they cover all costs and just provide minimum sufficient additional return to keep capital invested. Most forms of competitive advantage cannot be sustained for any length of time because the promise of economic rents invites competitors to duplicate the competitive advantage held by any one firm.
A firm possesses a sustainable competitive advantage when it has value-creating processes and positions that cannot be duplicated or imitated by other firms that lead to the production of above-normal rents.
Analysis of competitive advantage is the subject of numerous theories of strategy, including the five forces model pioneered by Michael Porter of the Harvard Business School.
[edit] Alternative Definition
“Competitive Advantage” is a depiction that the company or its products are each doing something better than their competition in a way that could benefit the customer. [2]
[edit] See also
[edit] References
- ^ Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter, Free Press, 1998 (1985)
- ^ Gabriel Steinhardt (2008). "Concept of Marketing" (PDF). 2.0. . Blackblot Retrieved on 2008.
