Sustainable Competitive Advantage - Meaning & Definition
Published by MBA Skool Team, Last Updated: September 10, 2015
What is Sustainable Competitive Advantage?
A company has a sustainable competitive advantage when it acquires some qualities or attributes which are different from other competitors in the market and which makes it outstanding in the market. When the favourable competitive advantages last for many years, then they are known as sustainable competitive advantages. In today’s competitive environment it is very important to have a sustainable competitive advantage to sustain. It can be measured by looking at the profits of the company with the advantage which should be more than its competitors in the market.
There are many different types of sustainable competitive advantages which are listed as below:
1) Powerful Brand: Having a strong powerful brand can help in many ways. It would help gain the customer loyalty such that even if the products offered are not cheaper/better than the competitors, the customers will prefer the brand. It takes a lot of investment to build strong brand equity and no time to destroy it. It can be great competitive advantage.
2) Low cost provider: When a company offers its goods at comparatively low prices for a long time, it is often preferred by the customers. It also helps in building the brand and creates a strong barrier for new entrants. Example: Wal-Mart
3) Pricing Power: When a company can increase the prices of its goods and services without affecting its market share, it is said to be have pricing power. This generally happens when there are strong barriers to the new entrants
4) Strategic Assets: When a company invests in the Research Department, it creates a lot of patents and copyrights which can be used as very strong competitive advantages.
5) Product Differentiation: The customer loyalty gained through the product advantage lasts longer than the one gained through the cost advantage. The company needs to continuously innovate with new strong products to gain the market share.
6) People Assets: It is very important for a company to have strong management team and well-connected team members. It helps in creating great leaders who can take good timely decisions and hence provide a great competitive advantage. Example: GE
Hence, this concludes the definition of Sustainable Competitive Advantage along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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