Running a business in the modern world can be complicated, and no matter what industry you operate in, you will have to deal with competition. The more popular your niche is and the more potential customers you have, the more you’ll have to fight with other businesses for market share.
In business, the best way to stay ahead of competing companies is to develop what’s known as a competitive advantage. This feature or aspect of your business sets it apart from the competition. It doesn’t have to be unique, but it does have to be something that other companies within your niche aren’t doing.
With a competitive strategy course, you can learn more about successfully leveraging your company’s resources to create an advantage. This will allow you to make the most of what you have available to take your company to the next level and set new standards within your market. For more details on building a competitive advantage, read on.
Types of Competitive Advantage
Generally speaking, there are three main types of competitive advantage. Each one offers its own unique benefits, and some may be better suited to your brand than others. Before you choose your competitive strategy, you need to understand each type and know how they can be used.
Differentiation
Differentiation is perhaps the most obvious type of competitive advantage, and it can be the most useful. Your product or service sets itself apart by offering something different, which could be a specific feature or a stronger brand image than rival companies.
Cost Leadership
Cost leadership is the simplest competitive advantage, as it’s just about the price of your product or service. If you can serve your customers at a lower cost than your competitors, you can build a strong competitive advantage. The key is to still have profitable margins while delivering the same product quality at a lower price.
Focus Advantage
Creating a focus advantage is about focusing on a smaller sub-section of your market. If it’s a large enough market, you could individually target several smaller groups of consumers. These consumers might have slightly different needs, and a business that targets them can build strong brand loyalty.
Implementing Your Advantage
It’s a good idea to perform a SWOT analysis of your business before deciding on a strategy. This will help you understand the strengths and weaknesses of the company while also identifying potential threats and opportunities. SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s a useful strategic management technique when determining your business strategy.
After identifying how you can create an advantage, it’s time to implement it. The VRIO framework is commonly used by businesses to do this, helping them find out which company resources are the key to creating an advantage. VRIO stands for valuable, rare, inimitable, and organised. Essentially, the key is to discover which resources your company has that are valuable, rare, difficult to copy, and organised to make it simple to capture value.
Common resources which can help your business develop its competitive advantage include location, unique products, staff, technical knowledge, innovative technology, and a good relationship with suppliers. The key is to work on these resources and ensure you get the most out of them. Work out how you can use these resources best to create a competitive advantage, and then draw up a plan that can easily be implemented.
