Sustainable Competitive Advantage
Sustainable Competitive Advantage
”A company can outperform its rivals only if it establishes a difference that it can reserve”. - Michael Porter The unique skills and assets a company has to outperform its rivals are the sources of competitive advantage. The competitive advantage results from implementing a value creating strategy that is not implemented simultaneously by its competitors. The strategy attains sustainability if the competitors are unable to erode the strategic advantage the company has over them. The skills and resources underlying the company’s competitive advantage must sustain the duplication. The advantage should be such, that the duplication of product or service does not lead to the duplication of the efficiency of its operations and processes.
The requirements for a resource or a skill to be of a source of sustainable competitive advantage are:
It must be valuable
It must not be imitable
It must be rare as compared to its competitors
It must not have any strategically equivalent substitute
A resource or skill is said to be valuable if it contributes in formulating a strategy to improve its efficiency. If a resource or skill is posessed by a large number of companies then it is not a source of Strategic competitive advantage. The companies product or service should reflect the differentiating factors that are key buying criteria to the customers. If the key buying criteria changes over period of time, the sustainable competitive advantage would depend on how well the company influence the key buying criteria or adopt to the changes. Competitive advantage is expected to lead to superior performance indicated by financial ratios. The barriers to imitate the firms resources are bound to decay, there is a need to constantly monitor and invest in the present source of advantage and also invest in other potential sources of advantage.
Model of Sustainable Competitive Advantage
Many
”A company can outperform its rivals only if it establishes a difference that it can reserve”. - Michael Porter The unique skills and assets a company has to outperform its rivals are the sources of competitive advantage. The competitive advantage results from implementing a value creating strategy that is not implemented simultaneously by its competitors. The strategy attains sustainability if the competitors are unable to erode the strategic advantage the company has over them. The skills and resources underlying the company’s competitive advantage must sustain the duplication. The advantage should be such, that the duplication of product or service does not lead to the duplication of the efficiency of its operations and processes.
The requirements for a resource or a skill to be of a source of sustainable competitive advantage are:
It must be valuable
It must not be imitable
It must be rare as compared to its competitors
It must not have any strategically equivalent substitute
A resource or skill is said to be valuable if it contributes in formulating a strategy to improve its efficiency. If a resource or skill is posessed by a large number of companies then it is not a source of Strategic competitive advantage. The companies product or service should reflect the differentiating factors that are key buying criteria to the customers. If the key buying criteria changes over period of time, the sustainable competitive advantage would depend on how well the company influence the key buying criteria or adopt to the changes. Competitive advantage is expected to lead to superior performance indicated by financial ratios. The barriers to imitate the firms resources are bound to decay, there is a need to constantly monitor and invest in the present source of advantage and also invest in other potential sources of advantage.
Model of Sustainable Competitive Advantage
Many
Bibliography: Paper on Sustainable Competitive Advantage by Sundar G. Bharadwaj, P. Rajan Varadarajan and John Fahy Article on Sustainable Competitive Advantage by Managing Critical Opposites- Vadim Kotelnikov Dells Path to a Sustainable Competitive Advantage-- Rudolph Ardon Bogantes, Aaron Blackburn, Matt Kincaid, John Nguyen, & Jia Zhang Creating sustainable competitive advantage --Martin Mangold http://www.1000ventures.com/business_guide/cs_inex_hp.html Somil Singhai 12020241068 MBA-IB