Competitive Advantage in Business

Questions and Answers

It focuses only on cost reduction.

It is easily replicated by competitors.

It is a unique advantage that allows market maintenance over time. (correct)

It is a temporary market position.

Offering unique features unmatched by competitors.

Premium pricing for high-end goods.

Focusing on a niche market to increase brand loyalty.

Providing the lowest production costs in an industry. (correct)

Increasing regulations in the industry.

High employee turnover.

Rising competition in the market.

A skilled workforce. (correct)

Outdated technology affecting productivity. Signup and view all the answers

External factors that can be leveraged to gain a competitive edge. Signup and view all the answers

To inform strategic decision-making. Signup and view all the answers

External industry structure. Signup and view all the answers

Concentrating on a specific market niche or segment. Signup and view all the answers

Study Notes

Definition: A sustainable competitive advantage is a unique advantage that sets a company apart from its competitors and allows it to maintain its market position over time.
Types of Competitive Advantage:
- Cost Leadership: Having the lowest cost of production in an industry.
- Differentiation: Offering a unique product or service that sets a company apart from its competitors.
- Focus: Targeting a specific market niche or segment.
Sources of Competitive Advantage:
- Internal Factors:
  - Resources (e.g. skilled labor, technology)
  - Capabilities (e.g. innovation, marketing)
- External Factors:
  - Industry Structure (e.g. barriers to entry, supplier power)
  - Market Trends (e.g. changes in consumer behavior)

Definition: A strategic planning technique used to identify and evaluate the internal Strengths and Weaknesses, and external Opportunities and Threats of an organization.
SWOT Analysis Framework:
1. Strengths:
  - Internal factors that are favorable to the organization (e.g. skilled employees, innovative products)
2. Weaknesses:
  - Internal factors that are unfavorable to the organization (e.g. high employee turnover, outdated technology)
3. Opportunities:
  - External factors that the organization can leverage to its advantage (e.g. growing market demand, emerging trends)
4. Threats:
  - External factors that could harm the organization (e.g. increasing competition, regulatory changes)
Uses of SWOT Analysis:
- Identifying areas for improvement
- Developing strategies to leverage strengths and opportunities
- Mitigating threats and weaknesses
- Informing strategic decision-making

A sustainable competitive advantage is a unique advantage that sets a company apart from its competitors and allows it to maintain its market position over time.
There are three types of competitive advantage:
Cost Leadership: Having the lowest cost of production in an industry.
Differentiation: Offering a unique product or service that sets a company apart from its competitors.
Focus: Targeting a specific market niche or segment.
Sources of competitive advantage come from internal and external factors.
Internal factors include resources (e.g. skilled labor, technology) and capabilities (e.g. innovation, marketing).
External factors include industry structure (e.g. barriers to entry, supplier power) and market trends (e.g. changes in consumer behavior).

SWOT analysis is a strategic planning technique used to identify and evaluate the internal strengths and weaknesses, and external opportunities and threats of an organization.
The SWOT analysis framework consists of four elements:
Strengths: Internal factors that are favorable to the organization (e.g. skilled employees, innovative products).
Weaknesses: Internal factors that are unfavorable to the organization (e.g. high employee turnover, outdated technology).
Opportunities: External factors that the organization can leverage to its advantage (e.g. growing market demand, emerging trends).
Threats: External factors that could harm the organization (e.g. increasing competition, regulatory changes).
SWOT analysis is used to identify areas for improvement, develop strategies to leverage strengths and opportunities, mitigate threats and weaknesses, and inform strategic decision-making.