Abstract One of the most critical activities for a business is to gain and sustain a competitive advantage. This activity can be difficult and time-consuming, especially for a small business where there are many businesses already established in the same industry. Unfortunately, some new business owners do not understand how to gain a competitive advantage or they fail to recognize how important doing this can be for the success of their company.
Some new ventures do not secure a market position where there is a reasonable chance of success. Other ventures will struggle to compete with larger competitors, focusing on price. And still other new businesses believe that just by opening their doors, consumers will hurry to buy their
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The first stage in which a new or small business should develop an effective competitive advantage is the market entry stage, although it is important to continue to develop and “tweak” this strategy all throughout the business life cycle.
To successfully enter a market, it is imperative that entrepreneurs develop a sound competitive advantage strategy that will allow them to gain a significant market share to guarantee that the business will succeed. Simply putting an open sign in front of your doors and allowing the public to enter does not ensure a successful venture. It is difficult and rare for a small business to effectively compete with larger businesses and corporations in price, so entrepreneurs should contemplate other competitive approaches to gaining market share.
Developing competitive advantage has three key core components (Winer, 2004). According to Winer (2004), the first component is that “competitive advantage must be able to produce customer value, which is defined by the consumer as lower prices, convenience, or quick delivery time”. The second core component is the enhanced value of the product or service provided as perceived by a consumer. Whether or not your product is superior, it must be seen as such by the consumer. Finally, the third component to competitive advantage requires that the business approach an entrepreneur uses should be difficult for competitors to duplicate.
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Starting a business, one may ask some questions to evaluate his or her ability to run a business successfully. An owner needs to question the finances, the challenges, the strengths, and weaknesses. First, the owners need to know finance: how much capital to startup business, what loans are available based on the business plan and financial statements, and how to keep up with profits and losses to determine the future of the business. Besides determining capital, the owners need to know what challenges they will face. Writing a well-executed business plan is the first challenge and important because it is a guideline to start business and to show lending institution or to attract investors for the business. Also, owners need to think who ideal customers are and who they can target to make a successful marketing strategy. Moreover, they have to think about their competitions because no business operates without competition whether it is direct or indirect. The competition has a significant impact on customer’s buying decisions. In order to compete with their competitors, they have to know their strengths and weaknesses: Are their products unique? Is the product better than the competitors’? Is the price
Competitive advantage exists when a firm has strategy, product or an attribute that makes the firm capable of delivering similar benefit to that of competitors at a cheaper cost. Having competitive advantage is not enough the company should be capable of sustaining that particular competitive advantage for a longer period of time.
Edmundson (2013) explains that companies that consistently expand in a profitable manner have learned to take their strength and transform them into a competitive advantage. Edmundson (2013) list nine principals that will help companies turn their strengths into competitive advantages. The nine principals are to be quantifiable, stay objective and creditable, be true and accurate, not stated by you’re competition, contrast, use concrete facts and tangible data, emotional, focused and simple, and tell stories to make your audience relate. Edmundson (2013) continues that typically companies that have
Borrowing from the numerous businesses that use the strategy of improving on already established strategies to create a competitive edge, I have also applied it in my business. When I opened a retail store to sell men and women clothes, I thought it would be easy as I figured people have to buy clothes and I had identified such businesses to make huge profits. I had done my market research well and I was up and running in a few months. However, due to insufficient capital, I had to open the store in a secluded location
If your business is profitable, it is more likely that other individuals will enter the same business as you hoping to be as successful as you are. The other businesses in the same field will be competing with you for the same customers. Other sellers may try to offer more and better services to win a share of the computer business. They may also try to lower prices of their services. Because of the strong pressure of competition, business firms must steadily try to provide the best services, create the best products and sell their products at the lowest prices. An example of this is the 2 different service stations in our community. We have Cefco and Chevron service stations. One might sell cheaper products ,such as gas, to compete with the other service station so they can have more
A competitive strategy, or business-level strategy, is the way a business used to successfully enter and penetrate into a market (Eastwood et al, 2006), and also, to succeed in this chosen market against its competitors (Johnson et al, 2014). A company needs to develop and apply appropriate strategy to help the company to generate distinctive competences (David, 2007). Compared with the strategies implemented in other levels of operation, competitive strategy is more focused on the competition against other competitors and strategic choices to better attain market share (Harrison and St. John, 2009). According to
A Competitive Advantage is a peculiarity for an organization between it's competitors . It's achieved either by lowering prices or by greatening the value of the product or by offering luxury service and benefits to cope with high prices .
1. What is competitive advantage, and how does it relate to a company’s business model?
Competitive advantage(CA) is an advantage competitors gain by providing or offering customers or consumers greater value for their money through product and service differentiation or through lower prices. Maintaining competitive advantage is crucial to many businesses or organizations' success in order to survive in the market. Competitive advantage is characterized by superior performance which could be an attribute to outperform the competitors whether current or potential; or gaining a higher market share in a particular industry thereby ensuring market leadership; or ultimately, maximization of profit.(JOBBER 2010)
Another quality of perfect competition that may be overlooked, but is vital to this industry is the ease of entry into the market. Start-up franchises within this market structure can begin operating with relatively low initial investments (compared to other industries). This is not the case where monopolies are concerned. There are numerous barriers to entry into monopolistic market structures, capital being one of the most prominent barriers.
Competitive strategy is the moves and methods that the firm has taken and is taking to appeal buyers, improve its market position, and to endure competitive pressures. The strategy is about what a firm’s capability to try to knock off competitors and attain competitive advantage, which can be offensive or defensive. There are three approaches to competitive strategy, which are low-cost leadership strategy where struggling to be the overall low-cost manufacturer in the in industry. Moreover, pursuing to distinguish one’s product offering from competitors (differentiation strategy), and the last one is focus or niche strategy where aiming on thin portion of the market rather than the whole market (Porter, 1998).
I. Introduction 1. There are several basic approaches to competing successfully and gaining a competitive advantage, but they all involve giving buyers what they perceive as superior value compared to the offerings of rival sellers. 2. This chapter describes the five basic competitive strategy option for building competitive advantage and delivering superior value to customers – which of the five to
Competitive advantage is explained by Mahoney and Pandian (1992) as the function of industry analysis, organizational governance and the firm’s effects in the form of resource advantages and strategies. In order for a firm to be competitive it must adapt to the volatile business environment and through strategic management decisions establish a competitive advantage that will ultimately produce superior performance relative to its competitors (Akimova 2000).
* A competitive advantage is one that distinguishes a firm or a business from the competitors in the minds of the customers. It also refers to the state or condition that make a business more successful than the businesses it is competing with, or a particular thing that makes it more successful such as having a higher sales through offering low or affordable goods and services.
exists when the firm is able to deliver the same benefits as competitors but at a