Sustained competitive advantage

Sustained competitive advantage
See also
Horizontal diversification strategy Differential advantage Resource based view Entering the market Competitor Product differentiation strategy Example of radical innovation Imitator strategy Proprietary technology

Sustained competitive advantage is a strategic advantage that a company has over its competitors that is lasting over a long period of time. It is determined by the company’s ability to identify and capitalize on opportunities and resources in order to outperform its competition. A sustained competitive advantage is created through a unique combination of resources and capabilities, such as innovation, technology, customer service, marketing, and other core competencies that are difficult to replicate. Achieving and maintaining this advantage requires ongoing management and strategic action, such as continuously innovating products, improving customer service, and adapting to changing market conditions.

Example of sustained competitive advantage

• Apple: Apple Inc. has a sustained competitive advantage over its competitors because of its unique approach to product design and customer experience. Apple’s products are known for their sleek and user-friendly designs, as well as their innovative features. The company is also known for its strong customer service and support, and its AppleCare program, which offers extended warranty and technical support. Apple has also invested heavily in research and development, which has allowed the company to stay ahead of its competitors in the technology industry.
• Amazon: Amazon has a sustained competitive advantage due to its vast selection of products, reliable delivery services, and customer-centric services. Amazon’s online marketplace provides customers with access to a vast selection of products and services, making it easy for customers to find what they are looking for. The company’s Prime membership program, which offers free two-day shipping and access to exclusive content, has driven customer loyalty and loyalty program usage. Amazon also offers a variety of services, such as Amazon Web Services and Amazon Marketplace, that give the company a competitive edge in the technology industry.
• Coca-Cola: Coca-Cola has a sustained competitive advantage due to its strong brand recognition and marketing efforts. The company has a long history of innovative marketing campaigns, such as its “Share a Coke” campaign, which helped to increase sales and drive customer loyalty. Coca-Cola also has a wide variety of products, ranging from its iconic soda to energy drinks, juices, and bottled water. The company has also invested heavily in research and development, which has enabled it to stay ahead of the competition in the beverage industry.

When to use sustained competitive advantage

Sustained competitive advantage is an important strategy for businesses to stay ahead of the competition in a competitive market. This strategy can be applied in a variety of situations, such as when entering a new market, launching a new product or service, or when trying to differentiate from competitors. Here are some of the main ways that businesses can use sustained competitive advantage to their advantage:

• Differentiate from Competitors: A company can use sustained competitive advantage to create a unique offering that sets it apart from its competitors, such as through innovative products, services, or customer experiences.
• Enter New Markets: By leveraging its competitive advantage, a business can enter new markets with a competitive edge. This can help it to gain market share and brand recognition quickly.
• Create Brand Loyalty: By consistently delivering an exceptional customer experience, a business can create loyal customers that remain loyal to the brand over time. This can help to create a strong and loyal customer base.
• Sustain Market Position: By maintaining a competitive advantage, a business can retain its market position and remain competitive in a highly dynamic market.
• Attract Investment and Partnerships: Having a sustainable competitive advantage can help a business to attract investment and partnerships from potential investors and partners, as they are confident that the business will be able to compete successfully in the long-term.

Types of sustained competitive advantage

A sustained competitive advantage is a strategic advantage that a company has over its competitors that is lasting over a long period of time. There are various types of sustained competitive advantage that can be developed, such as:

• Cost Leadership - This strategy involves producing goods and services at a lower cost than competitors, allowing the company to offer prices that are lower than its competitors. This type of advantage can be achieved by leveraging economies of scale, investing in efficient production processes and technology, and reducing overhead costs.
• Differentiation - This type of advantage involves creating products or services that are different or better than competitors’ offerings. Companies can differentiate their products and services with features, design, quality, and customer service.
• Innovation - Companies can build a sustained competitive advantage through innovation by creating new products or services, or introducing new ways of doing things. This can be done through research and development, or by leveraging their core competencies.
• Brand Loyalty - Companies can create a sustained competitive advantage by developing a strong brand and loyalty among customers. This can be achieved through marketing and advertising campaigns, as well as providing excellent customer service.
• Strategic Alliances - Companies can also gain a competitive edge by forming strategic alliances with other companies, allowing them to access new markets and resources. This can also help to reduce costs and increase efficiency.

Steps of sustained competitive advantage

In order to achieve and maintain a sustained competitive advantage, the following steps must be taken:

• Identify and capitalize on opportunities: Companies must be able to recognize and pursue opportunities that will give them an edge over their competitors. This includes researching and analyzing market trends, identifying target markets, and leveraging resources.
• Develop unique capabilities: Companies must develop unique capabilities and resources that are difficult to replicate. This includes investing in research and development, creating innovative products and services, and leveraging technology.
• Develop a strong brand: Companies must create a strong brand that resonates with consumers. This includes developing a strong and consistent branding strategy, investing in marketing and advertising, and building customer loyalty.
• Maintain operational efficiency: Companies must strive for operational efficiency in order to keep costs low and maximize profits. This includes streamlining processes, investing in technology, and training and developing employees.
• Adapt to changing market conditions: Companies must be able to adapt to changing market conditions in order to remain competitive. This includes understanding and responding to customer needs, staying abreast of industry trends, and being flexible and responsive to changes.

Advantages of sustained competitive advantage

A sustained competitive advantage can provide a company with significant advantages, allowing it to outperform its rivals. Such advantages include:

• Increased market share: Achieving and maintaining a sustained competitive advantage can help a company gain a larger market share, giving it more resources to invest in innovation, research and development, and customer service.
• Improved customer loyalty: Companies with a sustained competitive advantage often have loyal customers who are more likely to purchase their products and services, leading to improved customer loyalty.
• Lower costs: Companies with a sustained competitive advantage often have lower costs of production and sales, allowing them to offer lower prices to customers and increase profits.
• Increased profits: Companies that achieve and maintain a sustained competitive advantage often enjoy increased profits due to their increased market share, improved customer loyalty, and lower costs.
• Ability to adapt: Companies with a sustained competitive advantage are often able to quickly adapt to changing market conditions and customer needs, allowing them to stay ahead of their competition.

Limitations of sustained competitive advantage

Sustained competitive advantage is not without limitations. The following are some of the limitations of sustained competitive advantage:

• Imitation – Competitors can imitate and replicate the strategies and resources of a company, thus reducing the advantages that the company has.
• Market Conditions – Changes in the market, such as new technologies or changing customer preferences, can reduce the effectiveness of an advantage.
• Innovation – Companies must constantly innovate to maintain their competitive advantage. If they fail to do so, they may be overtaken by competitors.
• Resource Availability – Resources, such as technology or skilled personnel, may not always be available, either due to cost or scarcity.
• Competition – The competitive landscape is constantly shifting and new competitors can enter the market at any time, thus reducing the advantage of an existing company.

Suggested literature

• Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.
• Wright, P. M., McMahan, G. C., & McWilliams, A. (1994). Human resources and sustained competitive advantage: a resource-based perspective. International journal of human resource management, 5(2), 301-326.
• Barney, J. B. (1986). Organizational culture: can it be a source of sustained competitive advantage?. Academy of management review, 11(3), 656-665.