Everyone heard about the concept of competitive advantage. It was suggested by Michael Porter in 1985. The concept is simple. Your company gains competitive advantage when the company owns factor(s) that allows it to perform better than competitors.
Originally, Porter introduced 3 approaches to gain competitive advantage:
- Cost leadership – a company can produce product or service cheaper than its competitors.
- Differentiation – a company has a clear differentiation in the market to its competitors.
- Focus – a company understand its market better than its competitors.
However, the world has changed. The above approaches do not guarantee that you can enjoy the competitive advantage forever. Your competitors could imitate or copy your approach and dilute your position in the market quite quickly.
Therefore, what you are looking at is to achieve a ‘sustainable’ competitive advantage. What is it? We will talk about it tomorrow.