CREATING

COMPETITIVE
ADVANTAGE
COMPETITIVE ADVANTAGE
it is what makes an entity’s goods or
services superior to all of a
customers other choices.
BENEFITS OF THE COMPANY
PROVIDE

It must be something that your customers truly need.

It must also offer real value.
You must know your products features, it’s advantages, how they benefit
your customers.
You must stay up to date on the new trends that affect your product which
includes new technology.
DETERMINE YOUR TARGET
MARKET

Who are your customers? What are their needs? You’ve got to know exactly who
buys from you and how you can make their life better. That’s how you create
demand, the driver of all economic growth. Newspapers’ target market shrank to
those older people who weren’t comfortable getting their news online.
 IDENTIFY YOUR
COMPETITORS
Have you identified your real competitors? They aren’t just similar
companies or products. They also include anything else your
customer could do to meet the need you can fulfill. Newspapers
thought their competition was other newspapers until they
realized it was the internet. They didn’t know how to compete
with a news provider that was instant and free.
 COMPETITIVE
ADVANTAGE
In 1985, Harvard Business School Professor Michael
Porter wrote “Competitive Advantage,” the definitive
business school textbook on the topic which helps
companies to create a sustainable competitive
advantage. Porter explained that a company must
create clear goals, strategies, and operations to build
sustainable competitive advantage.
 THREE PRIMARY WAYS
COMPANIES ACHIEVE A
SUSTAINABLE ADVANTAGE

COST DIFFERENTIATION FOCUS

LEADERSHIP
 COST LEADERSHIP

Cost leadership means companies provide

reasonable value at a lower price. Firms do this by
continuously improving operational efficiency. That
usually means paying their workers less. Some
compensate for lower wages by offering intangible
benefits such as stock options, benefits, or
promotional opportunities.
 DIFFERENTIATION

Differentiation means companies deliver better

benefits than anyone else. A firm can achieve
differentiation by providing a unique or high-quality
product.
 COST FOCUS

Focus means the company’s leaders understand and

service their target market better than anyone else.
They either use cost leadership or differentiation to
do that. The key to a successful focus strategy is to
choose a very specific target market.
 6 WAYS TO GAIN
COMPETITIVE ADVANTAGE
1. CREATE A CORPORATE CULTURE
THAT ATTRACTS THE BEST TALENT
Finding the best people isn’t just important for productivity and cost
reduction. It’s also important because having happy workers means
that your customers have better experiences. Customers know the
difference between buying from a company where workers aren’t
happy. They know that when workers are supported, the quality of care
is better and products have fewer issues. Customers want to buy from
companies that take care of their people because this means that they
take care of their customers. This provides you with a competitive
edge.
2.DEFINE NICHES THAT ARE UNDER-SERVICED

When looking to gain a competitive advantage, it can be

easy to go after known niches where customers are easy to
find. However, looking for niches where customers are
under-serviced can provide you with a market advantage.
There are often few competitors, plus you can tap a market
an establish brand recognition early.
 3.UNDERSTAND THE DNA FOOTPRINT OF
YOUR IDEAL CUSTOMER

Customers aren’t all the same. In fact, just because someone is willing to buy
from you, Doesn’t make them the best customer. Targeting the right
customer, being aware of the buying process, who is involved in decision-
making, what information is needed and at what time, and so forth can help
your sales team (and post-sales support teams) win business and retain
lifelong customers. When customers feel that you understand them, truly are
in tune with their needs, serve them exactly what they need at the very time
that they need it, they will place you far above the competition.
4.CLARIFY YOUR STRENGTHS

Your business, just as any other, has core strengths and

competencies. Perhaps these are processes, or technology, or
knowledge/expertise/experience. Whatever they are, these offer
value to your customers and are what customers what to buy from
you. Consider how you can use these strengths in innovative and
creative ways to gain new business, tap new markets, etc.
Additionally, how can you use your core competencies to create
value for your customers? These are key factors you should explore
to create a clear market advantage.
5.ESTABLISH YOUR UNIQUE VALUE PROPOSITION

Many companies often use common value propositions such

as pricing, service levels, quality, brand recognition, many more
to create a competitive advantage. While this can and often is
a great beginning, continue to ask the "so what question until
you have a much more unique, special and competitive
statement than that of others in your market.
6.REWARD BEHAVIORS THAT SUPPORT
CORPORATE MISSION AND VALUE
Whether you seek to reward top performers in your organization, or to
acknowledge customers who have been your best buyers, rewarding
behavior has many benefits. First and foremost, rewards such as travel
incentives, provide opportunities to combine leisure with business and
build relationships outside of the office environment. In fact, of top
performing companies, 90% of them use rewards. Even when faced with
stiff competition, having a competitive advantage provides you with
greater opportunities to close more business. More importantly, the
stronger your competitive advantage, the greater your ability to sustain a
position of strength in the market no matter its conditions or level of
competition.
 HOW COUNTRIES USE
COMPETITIVE ADVANTAGE

A country can also create competitive

advantage, a practice that's called
national competitive advantage or
comparative advantage.
 INDIVIDUALS USE
COMPETITIVE ADVANTAGE

You can use the theory of competitive advantage to advance your career.
If you are an employee, work as if you were in business for yourself. Your
target market is your employer. Your benefit is how you increase the
company's profit. Your competition is other employees and technology.
Communicate your competitive advantage in your appearance, your
resume, and your interview. Once you've got the job, continuing
communicating your advantage in your work performance.
 KEY TAKE AWAY

Competitive advantage refers to the attributes that allow a

company to produce cheaper or better quality products than
its competitors.
 HOW COMPANIES SUCCEED
IN INTERNATIONAL MARKETS
Around the world, companies that have achieved international leadership employ
strategies that differ from each other in every respect. But while every successful
company will employ its own particular strategy, the underlying mode of operation-
the character and trajectory of all successful companies-is fundamentally the same.
Companies achieve competitive advantage through acts of innovation. They
approach innovation in its broadest sense, including both new technologies and new
ways of doing things. They perceive a new basis for competing or find better means
for competing in old ways.
 INNOVATION

-can be manifested in a new product design, a new production process, a new

marketing approach, or a new way of conducting training. Much innovation is
mundane and incremental, depending more on a cumulation of small insights and
advances than on a single, major technological breakthrough.

-It often involves Ideas that are not even “new”-ideas that have been around, but
never vigorously pursued. It always involves investments in skill and knowledge, as
well as in physical assets and brand reputations.
THE DIAMOND OF NATIONAL
ADVANTAGE
four broad attributes of a nation ; attributes that individually and as a system constitute the
diamond of national advantage, the playing field that each nation establishes and operates for
its industries.

These attributes are:

1.Factor Conditions- The nation’s position in factors of production, such as skilled labor or
infrastructure, necessary to compete in a given industry.

2.Demand Conditions- The nature of home-market demand for the industry’s product or service.

3.Related and Supporting Industries- The presence or absence in the nation of supplier
industries and other related industries that are internationally competitive.

4.Firm Strategy. Structure, and Rivalry- The conditions in the nation governing how
companies are created, organized, and managed, as well as the nature of domestic rivalry
DETERMINANTS OF NATIONAL
COMPETITIVE ADVANTAGE
-When a national environment permits and supports the most rapid
accumulation of specialized assets and skills-sometimes simply because
of greater effort and commitment-companies gain a competitive
advantage

Factor Conditions. to standard economic theory, factors of production-

➤ labor,
➤ land.
➤ natural resources,
➤ capital,
➤ Infrastructure
Demand Conditions- It might seem that the globalization of
competition would diminish the importance of home demand. In
practice, however, this is simply not the case. In fact, the composition
and character of the home market usually has a disproportionate
effect on how companies perceive, interpret, and respond to buyer
needs.

Home-demand conditions- help build competitive advantage when a

particular industry segment is larger or more visible in the domestic
market than in foreign markets. The larger market segments in a
nation receive the most attention from the nation’s companies:
companies accord smaller or less desirable segments a lower
priority.
THE DIAMOND AS A SYSTEM

The effect of one point depends on the others . For example, factor
disadvantages will not lead firms to innovate unless there is sufficient
rivalry. The diamond is also self reinforcing system. For example, a
high level of rivalry often leads to the formation of unique specialized
factor creation

Two Elements,
➤ Domestic Rivalry and
➤ Geographic concentration
 TWO ELEMENTS
DOMESTIC GEOGRAPHIC
RIVALRY CONCENTRATION
This aspect pertains to the
This refers to the intensity geographical distribution and
of competition among clustering of related industries and
supporting services within a
firms within a particular particular region. Concentrated
industry or sector in a industries benefit from economies of
continuous improvement. scale, specialized labor pools, and
knowledge spill overs, which can lead
to increased efficiency and
competitiveness.
DOMESTIC RIVALRY AND GEOGRAPHIC CONCENTRATION HAVE POWER TO CHANGE THE DIAMOND INTO A SYSTEM.THIS
IS BECAUSE DOMESTIC RIVALRY PROMOTES IMPROVEMENT IN ALL OTHER AREAS AND GEOGRAPHIC CONCENTRATION
ELEVATES AND MAGNIFIES THE INTERACTIONS BETWEEN THE FOUR DIFFERENCE INFLUENCES.THE DIAMOND MODEL
CREATES AN ENVIRONMENT THAT CLUSTERS OF COMPETITIVE INDUSTRIES.
 THE ROLE OF
GOVERNMENT
THE ROLE OF THE GOVERNMENT IN THE MODEL IS TO
ENCOURAGE COMPANIES TO RAISE THEIR PERFOMANCE, FOR
EXAMPLE BY ENFORCING STRICT PRODUCT STANDARDS

List of ways the government influences

the competitive advantage

Listed are the different ways that government influences competitive

advantage:
1. Focus on Specialized factor creation
2. Avoid intervening in factor and currency markets
3. Enforce strict product, safety, and environmental standards
4. Sharply limit direct cooperation among industry rivels
5. Promote goals that lead to sustained investment
6. Deregulate competition
7.Enforce strong domestic antitrust policies
8. Reject managed trade
 THE COMPANY
AGENDA
HERE ARE A NUMBER OF WAYS THAT
COMPANIES CAN PLAN TO INCORPORATE
COMPETITIVE ADVANTAGE:

1. Create pressures for innovation

2. Seek out the most capable competitors as motivators
3. Establish early-warning systems
4. Improve the national diamond
5. Welcome Domestic Rivalry
6. Globalize to tap selective advantages in other nations
7. Use alliances only selectively
8.Locate the home base to support competitive advantage
 THE ROLE OF LEADERSHIP
Leaderships is the way to push for competitive advantages and to effect change within a
company.They are the crucial part in not just surviving, bit having international
competitiveness and continuously better their companies through their leadership skill
Six factors of competitive advantage
➤ Price ➤ location ➤ Quality
➤ Selection ➤ Speed, Turnaround ➤ service
The prices that you change for different goods or services that you offer should
be reasonable and favor the consumers. We know that customers wpuld like to
PRICES acquire quality goods at affordable cost and as entrepreneurs we should put
this into consideration
We should ensure that our businesses are located in strategic places
LOCATION where we are easily accessible to many consumers or reach a wider
market

The quality of the goods or services that we offer to our

QUALITY consumers should at no point be compremised.
The rate at which we produce goods or provide services should

SPEED meet the place at which the goods move. The way we provide our
services also should be in a way that pleases the costumers
 Keeping a competitve advantage in mind, you must select the
products that will do well in the market. With the help of market,
SELECTION get to know which issues need to be solved and how your
products can make a difference

SERVICES You must provide services to your customers so that it

appeasls