Porter's Competitive Advantage Analysis

In part (A) of this assignment, I will speak about competitive advantage giving a thorough description of what competitive advantage is and what it involves. I will also go into depth with examples of how companies use different strategies to gain competitive advantage over their competitive rivals. For a company to gain competitive advantage they need to firstly look at what areas of the market they feel they are the strongest in. This is known as environmental scanning. The organisation doesn’t necessarily need to be the greatest in the world at what it does but it does need to be better than their competitors in the market at delivering value to the customers or delivering a uniqueness that their competitors are not already delivering to

If businesses allow their competitor to creep in to market contention, then this puts the business at high risk of being surpassed as market leaders - “Creating and sustaining superior performance” – Michael Porter. Porter’s book outlines exactly what business need to do to always sustain competitive advantage and the importance of always staying on top of your competitors. Sustained competitive advantage is one of the most important factors of a business’s success and this dictates the success or failure of a business.
Michael Porter is one of the world’s leading economists and business strategists. Michael Porter identified the basic generic concepts of competitive advantage. (1) Cost advantage (2) Differentiation advantage. (3) Cost Focus (4) Differentiation Focus. Companies will look at these four strategies and look to implement one of these to gain competitive advantage in their market segment. There are only two ways a company can be better than their rival competitors in the market, you either should be cheaper or more unique than

They attempt to produce on a large scale and sell them as cheap as possible and businesses use this to achieve economies of scale. Cost advantage is mainly the function of providing comparable buyer value but more efficiently than their competitor. When we look at Ryanair’s competitive scope we can see that they aim for lower cost but at a wider market. Ryanair are the leading airline company in Europe because of their pricing strategy.
Differentiation
Companies who accomplish activities at similar cost as their competitive rivals but can add a greater uniqueness that allows them to create more buyer value than their competitors and this gives them the ability to charge a superior price, this is known as differentiation. When we look at Starbucks coffee we can see that they are offering more than just coffee. Starbucks have almost a family bond with their loyal customers. Customers are loyal to the brand and this is what differentiates Starbucks from other Coffee companies such as Costa coffee, Dunkin Donuts