One major theme of business strategy is that companies should focus primarily on rivalry and defeating the competition. A concept that is central to this viewof strategy is that of a “sustainable competitive advantage,” a special asset or competence that enables a company to earn supercompetitive profits for an unusually long time.
A sustainablecompetitive advantage begins with a unique capability that shields a company from competition—usually something measurable, physical, and concrete, not a vague abstraction such as “technological leadership.”Sustainable competitive advantage
In simple terms, producers who sell their goods or services at a profit enjoy a competitive advantage when customers choose to buy from them instead of from theircompetitors.
In particular, for a competitive advantage to have any strategic meaning, three things must happen.
1. Customers must perceive a consistent difference between a company’s product orservice and those of its competition, and that difference must occur in one or more key buying criteria
2. The difference must come from a capability gap between the favored company and itscompetitors.
3. The product difference and the capability gap must endure over time.
What differences do customers want?
The buying criteria are usually attributes that affect the price consumers pay forthe product, the way they perceive the product, or their access to it.
These attributes could include quality, appearance, functionality, and the availability of after-sales service.
A gap incapabilities
True capability gaps consist of specific, often physical, differences and are likely to be prosaic and measurable. Abstractions such as “technological leadership” rarely qualify. Capabilitygaps tend to fall into four categories:
1. Business-system gaps, which result from the ability to perform individual functions better than competitors do.
2. Position gaps, which result from prior...