Competitive Advantage in Strategic Management
A business without strategy is a business without direction. A strategy without a
competitive advantage is a business without a precondition of success. Managing
strategically is to make decisions and implement strategies that allow an organization to
develop and maintain competitive advantage.
Competitive advantage is a concept that motivates strategists to replicate the strategies that
make most successful companies successful. According to this, we can learn that
competitive advantage is a very important concept in strategic management. Next, I will
look deeper into what is competitive advantage.
Competitive advantage is what sets and organization apart. When a firm sustains profits
that exceed the average for its industry, it has something that other competitors dont does
something better than other firms do, or does something that others cant, the firm is said to
possess a competitive advantage over its rivals. The goal of much of business strategy is to
achieve a sustainable competitive advantage. Getting and keeping it is what managing
strategically is all about. Its tough to do, and getting tougher.
There are 2 major views of alternative model of superior returns. Industrial organization
(I/O) view and resource-based view. The industrial organization view focuses on the
structural forces within an industry, the competitive environment of firms and how these
influence competitive advantage. The external environment determines the potential for
profits. Firms within the same industry have similar resources and pursuer similar
strategies. Resources are mobile across firms (because of this, seemingly unique
differences among firms in the same industry will quickly vanish, competing firms will
adopt or purchase similar resources. Resource-based view takes the approach that a firms
resources are more important than industry structure in getting and keeping competitive
advantage. It sees firms as very different collections of assets and capabilities. The internal
resources and capabilities are the source of a firms profitability, not the external
environment. Firms each have unique resources and capabilities. Resources are not
necessarily mobile across firms.2 Although the resource-based view focuses on analyzing
internal organizational factors, it doesnt ignore important external factors. It links an
organizations internal capabilities with its external environment. Competitive advantage
will accrue to the firm that possesses unique assets or capabilities. A resource-based view
emphasizes that a firm utilizes its resources and capabilities to create a competitive
advantage that ultimately results in superior value creation. According to the
resource-based view, in order to develop a competitive advantage the firm must have
resources and capabilities that are superior to those of its competitors. Without this, the
