A competitive advantage is a capability competitive advantage position that allows you to outperform competitors. It is considered the basis for profitability in a competitive market. In other words, firms that have no advantages can only compete on price.
This quickly becomes unprofitable, particularly if the competition have lower costs. Anything that you do better than your competition typically adds to your competitive advantage. Scale Leveraging economies of scale to drive unit costs down. Variety Offering a great variety of products and services can lead to efficiencies such as reduced cost. Customers may also value variety such as the selection offered by a large supermarket. Know-how The skills, abilities and experience of your employees is a critical factor in most industries.
Processes Efficient operational processes that get things done faster, cheaper or better. Organizational Culture Organizational culture are the norms, values and habits that are unique to every organization. Capital Access to deeper financial resources than the competition can be a major advantage in capital intensive industries. Risk Management The ability to optimize risk-reward by identifying and controlling risks.