ManagementMania AppMania EduMania JobMania BusinessPages

What is Competitive Advantage
Competitive advantage is anything that gives you a temporary head start over the competition.

Competitive advantage is anything that gives you a temporary head start over the competition. It is what you have better than your competitors - your offering to the customers or anything what makes your business better, more flexible or your products better placed on the market. A competitive advantage can ultimately decide whether a customer chooses you or your competitor. It can also helps you get faster the market or get larger market share.

But the competitive advantage is not permanent. It is a temporary thing that you can quickly lose either by your own mistake, by the competition’s efforts or simply by the market situation. You have a good idea or a good product, but you can’t sell it, then you lose your competitive advantage.

What can be a competitive advantage?

Above all, the competitive advantage is how is your company better than your competition:

  • better product or better service
  • better customer support or customer services
  • faster response to the customer requests
  • faster go to market approach
  • cheaper product (usually cheaper at comparable competitive offer quality)
  • better distribution channels (how you offer or deliver to the customer)
  • better promotion and marketing

Competitive advantage can also be anything that are not so obvious from the customer’s point of view and yet give the company a competitive edge

  • better people, human resources - more helpful workers, smarter, more educated, more motivated and harder people
  • better technology
  • better information flow, better communication,
  • more flexible business processes, faster responses to market changes
  • better market information (about competition, trends) and the ability to adapt quickly
  • better, increased productivity and efficient business processes (leads to cheaper and faster processes)
  • higher production quality (less scrap and lower costs)
  • better access to finance, financing your activities
  • lower information noise within the company
  • better leadership, better strategic management
  • better market position of the company

How to get a competitive advantage?

We can do this by doing something (or everything) better than our competitors. That’s easy to say, but harder to do. A competitive advantage is usually a combination of the above mentioned things (eg a unique idea, better access to funding). You may have a good idea before your competition, but because the competition has been able to bring it faster or more aggressively to the market, you have lost your original competitive advantage and, on the contrary, the competition, through better funding, has gained it. It is not possible to say universal rule of how to gain a competitive advantage, because it is something different for every situation and can quickly disappear.

In general, the biggest and most enduring competitive advantage is good people and good information. If you want to figure out what your competitive advantage is, try to do VRIO analysis.

Related terms and methods:

Related management field:

previous next
Did this article help you?
Last update: 01.05.2019


You cannot contribute to the discussion because it is locked

Related consulting companiesmore...