Strategy and Competitive Advantage

Winning business strategies are grounded in sustainable competitive advantage. A company has competitive advantage whenever it has an edge over rivals in securing customers and defending against competitive forces. There are many sources of competitive advantage: making the highest-quality product, providing superior customer service, achieving lower costs than rivals, having a more convenient geographic location, designing a product that performs better than competing brands, making a more reliable and longer-lasting product, and providing buyers more value for the money (a combination of good quality, good service, and acceptable price). To succeed in building a competitive advantage, a firm must try to provide what buyers will perceive as "superior value"-either a good product at a low price or a "better" product that is worth paying more for. This chapter focuses on how a company can achieve or defend a competitive advantage1 We begin by describing the basic types of competitive strategies and then examine how these approaches rely on offensive moves to build competitive advantage and defensive moves to protect competitive advantage.