Essay on Competitive Advantage - 2171 Words

Corporate Strategy quot;Sources of competitive advantage rarely yield added value that can be sustained over time.quot; The following essay is going to attempt to assess the above proposition and try to find if it is possible to add value continually over a period of time. I will first discuss what competitive advantage is and what it means to a firm. Then I will explain the sources of competitive advantage and how the distinctive capabilities of a firm allow it to sustain added value. The discussion is based on a number of viewpoints from different authors who will be clearly indicated and acknowledged. I begin with explaining what competitive advantage is. So, what is Competitive Advantage? In a number of industries, the average†¦show more content†¦A firms profitability is a function not only of industry conditions, but also of the amount of value it creates relative to its competitors. The amount value the firm creates in comparison depends on its cost and differentiation positions relative to competitors. No business can exist without creating positive value, and to achieve a competitive advantage it must add more value that its competitors. Added value is the difference between the market value of a firms output and the value which its inputs would have in comparable activities undertaken by other firms. Added value can be achieved if customers or suppliers are willing to undertake relationships which they would not make available to other people. The main sources of competitive advantage are architecture, reputation and innovation. It is the ability of the firm in how it utilizes its distinctive capabilities to add value to its competitive advantage. Architecture is the first primary distinctive capability of competitive advantage. It is a network of relational contracts within , or around, the firm. It is a description of relationships held by a firm internally or externally, or with a group of other firms. Architecture can add value and provides competitive advantage by encouraging the formation of organizational knowledge and the development of organizational routines and cooperative ethics. Some firmsShow MoreRelatedCompetitive Advantages Of Competitive Advantage924 Words   |  4 Pagesâ€Å"Competitive advantage literally is the ability to sustain profits that exceed the average for the industry through developing distinctive competencies: distinctive, because the competitors don’t have them and because they are fundamentally difficult to replicate† (Berry, 2012). Competitive advantage through people is critical for a business to succeed. Without people, businesses would lack the ability to have the innovat ions to differentiate their products or services from their contenders inRead MoreCompetitive Advantage And Competitive Advantages1627 Words   |  7 Pageshaving sustainable competitive advantage has become imperative so as to survive. The metamorphosis of technology has made the job further challenging to have a competitive advantage and sustain it. Competitive advantage is defined as an idiosyncratic lead a firm has over its fellow challengers and emulators. This lead enables the firm to vanquish its challenger. In other words it is something that distinguishes an organization from the competitors. For a competitive advantage to be sustainable, theRead MoreCompetitive Advantages Of Competitive Advantage Essay1584 Words   |  7 PagesQuestion 1: Competitive advantages are conditions that permit an organization or nation to deliver a decent or administration at a lower cost or in a more alluring manner for clients. 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