STRATEGIC MANAGEMENT PAPER
“COMPETITIVE ADVANTAGE”
Lecturer : Dr. Ir. Syahrial Shaddiq, [Link]., M.M.
By group : 6
Roldan Rompas Masoa (2210312710003)
Joan Budiman Mahalong (2210312720002)
Daniela Ortega Ambalao (2210312720001)
BACHELOR’S DEGREE IN MANAGEMENT
FAKULTY OF ECONOMICS & BUSINESS
LAMBUNG MANGKURAT UNIVERSITY
BANJARMASIN
2024
PREPACE
Thank God for the presence of Allah SWT who has given His grace and guidance so that I
can complete this paper assignment entitled "Competitive Advantage" on time.
The purpose of writing this paper is to fulfill Mr. Syahrial's assignment in the Statistics
course. Apart from that, this paper also aims to increase insight into "Competitive Advantage"
for readers and also for us.
We realize that the paper I wrote is still far from perfect. Therefore, I will look forward to
constructive criticism and suggestions for the perfection of this paper.
Banjarmasin, 5 Juni 2024
Writer
CONTENT
PREPACE..............................................................................................................................
CONTENT.............................................................................................................................
CHAPTER I...........................................................................................................................
INTRODUCTION.................................................................................................................
BACKGROUND...................................................................................................................
PORPOSE OF PAPER.........................................................................................................
PROBLEM STATEMENT...................................................................................................
CHAPTER II.........................................................................................................................
CONCEPT.............................................................................................................................
COMPETITIVE ADVANTAGE..........................................................................................
THE IMPORTANCE............................................................................................................
TYPES OF COMPETITIVE ADVANTAGE......................................................................
CONCEPT OF COMPETITIVE ADVANTAGE...............................................................
EFFECT.................................................................................................................................
SUSTAINING COMPETITIVE ADVANTAGE.................................................................
ACHIEVING & MAINTAINING.......................................................................................
CHAPTER III........................................................................................................................
CLOSSING............................................................................................................................
CONCLUSION......................................................................................................................
CHAPTER I
INTRODUCTION
In today's fiercely competitive business environment, companies strive to achieve an edge
over their rivals to secure market share, drive growth, and enhance profitability. This
edge, known as competitive advantage, is pivotal for a firm's success and longevity.
Competitive advantage refers to the unique attributes or capabilities that allow an
organization to outperform its competitors. These advantages can manifest through cost
leadership, product differentiation, superior quality, exceptional customer service, or
innovative capabilities. Understanding and leveraging competitive advantage is crucial
for any business seeking to thrive in a competitive marketplace.
Porpose of this study
This paper aims to explore the nature of competitive advantage, its sources, porpose,
types, concept and strategies for sustaining and achieving and maintaining it.
Problem Statement
1) What are the main types of competitive advantage?
2) What are the key sources of competitive advantage?
3) How can firms sustain their competitive advantage?
CHAPTER II
CONCEPT
What is Competitive Advantage?
Competitive advantage refers to the unique factors that allow a business to outperform its
competitors in the marketplace. This could be through offering superior products, services, or
experiences that customers value more highly. Developing a sustainable competitive
advantage is essential for a business to thrive and grow in a competitive market.
The Importance of Competitive Advantage
Competitive advantage is the foundation of a successful business strategy. It allows a
company to differentiate itself from competitors, gain a larger market share, and ultimately
increase profitability. By understanding and leveraging its unique strengths, a company can
better meet the needs of its target customers and stay ahead of the competition. Competitive
advantage is crucial for long-term sustainability and growth in today's dynamic, global
marketplace.
Achieving and maintaining a strong competitive position enables a business to command
higher prices, attract more customers, and fend off rivals. It also provides a cushion against
economic downturns and market disruptions. Competitive advantage is a key factor in
ensuring a company's success and securing its future in the industry.
Types of Competitive Advantage
Cost Leadership
Cost leadership is a competitive advantage strategy where a company aims to be the low-cost
producer in its industry. By focusing on operational efficiencies, economies of scale, and
cost-cutting measures, a cost leader can undercut competitors on price and gain a larger
market share. This strategy allows the company to offer products or services at the lowest
possible price, making it difficult for rivals to match their pricing.
To achieve cost leadership, companies may invest in advanced technologies, streamline their
supply chain, optimize production processes, and leverage their purchasing power to
negotiate better deals with suppliers. By maintaining a relentless focus on cost reduction, the
cost leader can maximize profits and reinvest in further improving its cost advantage.
This is the types of cosh leadership of strategis
Operational Efficiency
Focus on streamlining processes, automating tasks, and eliminating waste to drive down
costs. Leverage economies of scale and optimize supply chain management.
Procurement Advantages
Negotiate favorable supplier contracts, bulk purchasing, and strategic partnerships to secure
lower input costs. Leverage buying power to extract discounts.
Technology Investments
Leverage technology to boost productivity, enhance decisionmaking, and reduce labor costs.
Automate repetitive tasks and utilize data analytics to identify cost savings.
Continuous Improvement
Foster a culture of innovation and incremental improvements to drive down costs over time.
Regularly review processes and seek opportunities for optimization.
Differentiation
Differentiation is a key strategy for achieving competitive advantage. It involves creating a
unique product or service that stands out from the competition. By differentiating, a company
can charge a premium price, build customer loyalty, and fend off rivals. Effective
differentiation requires deep insights into customer needs and a relentless focus on innovation
and quality. A differentiated offering could be superior design, superior performance, superior
service, or a combination of these factors.
Successful differentiation strategies often center around brand positioning, product features,
or value-added services. For example, Apple has differentiated itself through sleek, user-
friendly design, while Southwest Airlines has differentiated itself through exceptional
customer service and a no-frills business model. Differentiation can be a powerful way to
create a sustainable competitive edge, but it requires ongoing investment and a willingness to
think outside the box.
There are tree types of Differentiation
Product Differentiation
Offering a unique product or service that stands out from the competition can create a
compelling value proposition for customers.
Branding and Marketing
Developing a strong, recognizable brand and executing strategic marketing campaigns can
differentiate a company in the market.
Customer Experience
Providing exceptional customer service and support can set a company apart and foster
customer loyalty.
Focus Strategy
The focus strategy is a type of competitive advantage that involves targeting a specific,
narrow market segment rather than competing across an entire industry. By focusing on a
particular customer group, geographic region, or product line, a company can tailor its
offerings and marketing to better meet the unique needs of that target market. This allows the
company to outcompete larger, more generalized rivals that are unable to provide the same
level of specialized service and customization.
A successful focus strategy requires a deep understanding of the target customers'
preferences, pain points, and buying behaviors. The company must then design its products,
pricing, and distribution channels to precisely meet those needs. This often allows the
company to command premium prices and build strong brand loyalty within its niche.
However, the downside is that the company may be vulnerable if its target market shrinks or
becomes less profitable over time.
Concept of Competitive Advantage
Competitive advantage refers to a business's ability to offer products or services that are
superior to those of its competitors. This can be achieved through various means, such as cost
leadership, differentiation, or a focused strategy. The core idea is to create unique value that
customers perceive as being worth more than the competition's offerings.
A company with a strong competitive advantage is able to charge higher prices, gain greater
market share, and achieve higher profitability than its rivals. This advantage can come from
factors like superior technology, brand recognition, economies of scale, or a unique customer
experience. Maintaining this advantage over time is crucial for long-term business success.
The concept of competitive advantage is fundamental to strategic management, as it helps
organizations identify and leverage their unique strengths to outperform the competition. By
understanding and continuously enhancing their competitive position, businesses can position
themselves for sustainable growth and profitability in their respective markets.
Effect
Improved Financial Performance
A strong competitive advantage can lead to higher profitability, increased market share, and
better financial results for a business. This allows the company to reinvest in growth and
innovation, further strengthening its position in the market.
Enhanced Customer Loyalty
When a company offers a unique product or service, customers are more likely to remain
loyal and continue doing business with that company. This customer loyalty can be a
powerful driver of long-term success and sustainable growth.
Increased Employee Motivation
A company with a strong competitive advantage can often provide better compensation,
benefits, and career opportunities to its employees. This can lead to higher employee
satisfaction, reduced turnover, and a more motivated and engaged workforce.
Sustaining Competitive Advantage
Innovation
Constant innovation is key to sustaining a competitive advantage. Successful companies
continuously develop new products, services, and processes to stay ahead of the competition
and meet evolving customer needs.
Quality
Delivering high-quality products and services is essential for maintaining a competitive edge.
Companies must focus on excellence in every aspect of their operations to ensure customer
satisfaction and loyalty.
Agility
In today's rapidly changing business landscape, the ability to adapt quickly is crucial. Agile
companies can respond swiftly to market shifts, technological advances, and evolving
customer preferences, giving them a distinct advantage.
Achieving and Maintaining Competitive Advantage
Sustaining a competitive advantage is essential for long-term business success. It requires a
strategic and proactive approach, including continuous innovation, adaptability to market
changes, and effective utilization of resources. By consistently offering unique value to
customers, companies can build brand loyalty, fend off competitors, and secure a dominant
market position.
CHAPTER III
CLOSSING
Conclusion
Competitive advantage refers to a sustainable benefit that a company has over its competitors,
allowing it to outperform them in the market. This advantage can come from various sources,
such as lower costs, unique products or services, or superior customer service. Achieving and
sustaining competitive advantage is crucial for a company's success, as it enables the
company to attract and retain customers, increase its market share, and generate higher
profits.
There are several types of competitive advantages, including cost advantage, differentiation,
and access to unique resources or capabilities. A cost advantage occurs when a company can
produce goods or services at a lower cost than its competitors, allowing it to offer lower
prices or higher margins. Differentiation involves offering unique products or services that
are perceived as superior by customers, such as through branding, quality, or features. Access
to unique resources or capabilities can provide a competitive advantage if these resources or
capabilities are not available to competitors.
Achieving and sustaining competitive advantage requires companies to focus on their core
competencies, innovate continuously, and adapt to changing market conditions. This means
that companies must constantly seek ways to improve their products, services, and
operations, as well as stay ahead of trends and changes in the industry. Additionally,
companies must also differentiate themselves through unique products or services, customer
service, or branding, in order to stand out in the market and attract customers.
