Major drug companies can also market branded drugs at high price points because they are protected by patents. An efficient business will save on resources such as materials, labour, time and so forth, while producing a high level of outputs such as products or services. Competitive advantage is gained at the corporate and business levels through synergy and market share, respectively. The sources of cost advantage are varied and depend on the structure of the industry. Given this perspective, the firm will have three options for creating a sustainable competitive advantage: i. either through lower cost offerings (cost advantage) or through product differentiation (differentiation advantage Having a lower cost structure or greater specialized expertise are common examples of competitive advantages in the professional services. A competitive advantage is, an attribute that a firm/ company possesses which enables it to outperform its peers. 1. Experience is thus a potentially important source of competitive advantage for a large firm. Competitive advantage and sustained competitive advantageWhen a firm can implement a strategy that adds value to the firm which no other firm is implementing parallel, then this firm is said to have attained a competitive advantage over other firms. Copyright © 2021 CivilServiceIndia.com | Website Development Company : Concern Infotech Pvt. Competitive advantage is the leverage a business has over its competitors. "A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player" (Barney 1991 cited by Clulow et al.2003, p. 221). For manufacturers involved in niche marketing, finding and nurturing a competitive advantage can mean increased profit and a venture that is sustainable and successful over the long term. Many authors have stated that competitive advantage is obtained through the business' strengths and competencies, of which are not matched by other businesses in the market. This book describes how a firm can gain a cost advantage or how it can differentiate itself. Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. It is what makes the brand, product, or service to be perceived as superior to the other competitors. It's the law of the business jungle. The offers that appear in this table are from partnerships from which Investopedia receives compensation. A firm can gain competitive advantage only when it performs its strategically important activities (designing, producing, marketing delivering and supporting its product) more cheaply or better than its competitors. It makes firms unique to their customers and over competitors. Sustainability in the context of a sustainable competitive advantage is independent with regards to the time-frame. Competitive advantage is what makes an entity better than opponents. By being large, a firm can gain advantage by: (1) paying less interest to its creditors and underwriters; and (2) paying less tax by internally shifting funds from one business to another. Competitive advantage, as the name implies, is an advantage that a company or market participant has over other competitor market participants in a given function or industry. The products and services offered to customer must exhibit attributes that satisfy the customers' needs and wants over those of competitors. Competitive Advantage. The two main types of competitive advantages are comparative advantage and differential advantage. In recent times CSR and competitive advantage has been much admired topic in academia. It is the factor that buyers look at when choosing between options in the market. For any enterprising firm, the competitive advantage may stem from any of the host of functions it performs. Target Market:The perfect knowledge of who buys from the brand, what they desire from the brand, and who could start buying from the brand if certain strategies are executed is essential for t… There are four factors that allow a business to gain and sustain competitive advantage. Like all assets, intangible assets are those that are expected to generate economic returns for the company in the future. A competitive advantage is the recognition that a company either delivers quality products at a lower cost than the competition or offers support and services at a greater value than the competition, according to the Quick MBA website. higher profit margin, greater return on assets, valuable resource such as brand reputation or unique competence in producing jet engines. Efficiency: It is defined as the ability to achieve a high level of output from minimal input. If a company can’t identify one or just doesn’t possess it, competitors soon outperform it and force the business to le… Dog eat dog refers to intense competition in a market where products or services have become commoditized. High quality products and services will provide business with a point of differentiation, and therefore gaining competitive advantage. The three strategies are cost leadership, differentiation, and focus.