Strategy and the Quest for Competitive Advantage

Generally, a company’s strategy should be aimed either at providing a product or ser­vice that is distinctive from what competitors are offering or at developing com­petitive capabilities that rivals cannot quite match. What separates a powerful strategy from an ordinary or weak one is management’s ability to forge a series of moves, both in the marketplace and internally, that makes the company distinctive, tilts the playing field in the company’s favour by giving buyers reason to prefer its products or services, and produces a sustainable com­peti­tive advantage over rivals. company distinctive, tilts the playing field in the company’s favour by giving buyers reason to prefer its products or services, and produces a sustainable com­peti­tive advantage over rivals.

CORE CONCEPT: A company achieves sustainable competitive advantage when an attractive number of buyers prefer its products or services over the offerings of competitors and when the basis for this preference is durable.

Four of the most frequently used strategic approaches to setting a company apart from rivals and achieving a sustainable competitive advantage are:

1. Being the industry’s low-cost provider.
2. Outcompeting rivals based on such differentiating features as higher quality, wider product selection, added performance, better service, more attractive styling, technological superiority, or unusually good value for the money.
3. Focusing on a narrow market niche.
4. Developing expertise and resource strengths that give the company competitive capabilities that rivals cannot easily imitate or trump with capabilities of their own.

Most companies realize that winning a durable competitive edge over rivals hinges more on building competitively valuable expertise and capabilities than it does on having a distinctive product. Company initiatives to build competencies and capabilities that rivals do not have and cannot readily match can relate to greater product innovation capabilities than rivals, better mastery of a complex technological process, expertise in defect-free manufacturing, specialized marketing and merchandising know-how, global sales and distribution capability, superior e-commerce capabilities, unique ability to deliver personalized customer service, or anything else that constitutes a competitively valuable strength in creating, producing, distributing, or marketing the company’s product or service.