According to Porter, a firm's competitive advantage can be categorized into one of three types: cost advantage, differentiation advantage, or focus advantage. A cost advantage occurs when a firm is able to produce a good or service at a lower cost than its competitors. A differentiation advantage occurs when a firm is able to produce a good or service that is perceived by consumers as being better than its competitors. A focus advantage occurs when a firm is able to specialize in a particular market segment and exploit its competitive advantages in that segment.
Porter's "positioning approach" to strategy assists a strategic manager in evaluating their firm's competitive advantage by helping them to identify the type of competitive advantage that their firm possesses. Additionally, the positioning approach can help a firm to develop a sustainable competitive advantage if they are able to identify a unique position in the market that is not easily replicated by their competitors.
The key to developing a sustainable competitive advantage is to ensure that your firm's competitive advantages are not easily copied by your competitors. One way to do this is to
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