Three Methods Of Competitive Advantage

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Competitive Advantage Every organization is a victim of its own success, so there is a need of diversification, which creates a different mix of talents and capabilities. It must learn how sustain competitive advantage it should protect itself from being despoiled and assimilate new sources of technologies, skills and core competencies. Competitive advantage is at the heart of firm 's performance. It is concerned with the interplay between the types of competitive advantage, i.e., cost, and differentiation, and the scope of the firm 's activities. The value chain plays an important role in order to diagnose and enhance the competitive advantage. A sustainable competitive advantage creates some barriers that make imitation difficult. Without a sustainable competitive advantage, above average performance is usually a sign of harvesting (Porter, 1985). Competitive advantage is, in very basic words, a position a firm occupies against its competitors. According to Michael Porter, the three methods for creating a sustainable competitive advantage are through: 1. Cost leadership - Cost advantage occurs when a firm delivers the same services as its competitors but at a lower cost. 2. Differentiation - Differentiation advantage occurs when a firm delivers greater services for the same price of its competitors. They are collectively known as positional advantages because they denote the firm 's position in its industry as a leader in either superior services or cost. 3. Focus

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