Competitive advantage focal point of strategy

COMPETITIVE ADVANTAGE: FOCAL POINT OF STRATEGY
Competitive Advantage can be defined as the ability of a firm to
outperform its industry, that is, to earn higher rates of profits
than the industry norm. And for a firm to achieve a competitive
advantage, it must create more value for its customers than its
competition.
In the simplest terms, such a competitive advantage is based on
excelling in providing one or more of three forms of customer
value. Customers want goods and services which are i) better, ii)
cheaper and iii) faster . These corresponding forms of
competitive advantage are referred as 1) Differentiation, 2) Cost
Leadership and 3) Quick response.

COMPETITIVE ADVANTAGE: FOCAL POINT OF STRATEGY
Differentiation
Cost Leadership
Quick Response
Competitive
Advantage
Economic
Value Added
Market Value
Added
Competitiveness Financial Performance
Value Created for
Customers
Value Captured for
Investors

Differentiation
•
In pursuing CA based on differentiation , firms attempt to
create unique bundles of products/ services that will be highly
valued by customer . The activity focus is on R&D, higher
quality material, advertising, Quality systems
•
They are willing to pay premium price for the differentiated
products and services as given below:
•
Product features: A Product’s physical characteristics or
capabilities may be an important form of differentiation e.g.