Competitive Advantege

Competitive advantage
According to Michael Porter, the three methods for creating a sustainable competitive advantage are through:
1. Cost leadership - Cost advantage occurs when a firm deliversthe same services as its competitors but at a lower cost; [1]
2. Differentiation - Differentiation advantage occurs when a firm delivers greater services for the same price of its competitors. They arecollectively known as positional advantages because they denote the firm's position in its industry as a leader in either superior services or cost; [2]
3. Focus (economics) - A focused approachrequires the firm to concentrate on a narrow, exclusive competitive segment (market niche), hoping to achieve a local rather than industry wide competitive advantage. There are cost focus seekers, whoaim to obtain a local cost advantage over competition and differentiation focuser, who are looking for a local difference. [3]
Many forms of competitive advantage cannot be sustained indefinitelybecause the promise of economic rents invites competitors to duplicate the competitive advantage held by any one firm.
A firm possesses a sustainable competitive advantage when its value-creatingprocesses and position have not been able to be duplicated or imitated by other firms,[4]. Sustainable competitive advantage results, according to the resource-based view theory in the creation ofabove-normal (or supranormal) rents in the long run.
Analysis of competitive advantage is the subject of numerous theories of strategy, including the five forces model pioneered by Michael Porter of the HarvardBusiness School.
The primary factors of competitive advantage are innovation, reputation and relationships.
Competitive advantage occurs when a organization acquires or develops an attribute orcombination of attributes that allows it to outperform its competitors. These attributes can include access to natural resources, such as high grade ores or inexpensive power, or access to highly...