As Wikipedia puts it, “competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors.”
These attributes can be grouped into 4 categories:
- They are size related. For example, economies of scale / experience curve / network effect
- Gaining market power from the effect of a brand
- Access to scare or valuable resources like natural resources / technology (patented and cannot be copied) / unique distribution channel
- Or something that is less quantifiable - core competencies, which is by having better people (resourced based) / better coordination (organisation) / working smarter (processes), not the same as experience curve
The next time you think of a company that is doing well (could be your company), think in terms of the above categories. What is your competitive advantage? Are you really doing better? Remember, it is not a competitive advantage if it is not hard to copy.
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