Home Learning Competitive Advantage Model: Resources & Capabilities; Cost & Differentiation; Value Creation

Competitive Advantage Model: Resources & Capabilities; Cost & Differentiation; Value Creation

Since both cost and differentiation advantages summarize the organisation’s position in the marketplace, they can indeed be called positional advantages.

A Competitive Advantage is found in cases where the organization has the capacity to provide the comparable added benefits as rivals but at a competitive price (cost advantage), or offer advantages that go above and beyond those of competing products and services (differentiation advantage).

As a result, a competitive advantage helps the organization to generate better value for its customers or clients along with much better sales and profits for the company.

Since both cost and differentiation advantages summarize the organisation’s position in the marketplace, they can indeed be called positional advantages.

A resource based perspective highlights that a company takes advantage of its Resources as well as competencies to create a competitive advantage that in the long run benefits in better value creation.

The following diagram brings together the resource-based and positioning perspectives to demonstrate the model of competitive advantage:

model-of-competitive-advantage competitive advantage Competitive Advantage Model: Resources & Capabilities; Cost & Differentiation; Value Creation model of competitive advantage

Resources and Capabilities

Based on the resource-based perspective, to be able to build a competitive advantage the organization needs to have sufficient resources and capabilities that are preferable over its rivals. Otherwise, rivals can easily duplicate the approach the organization was following and then any advantage in a short time would probably cease to exist.

Capabilities promote the organisation’s potential through the effective utilization of its resources.

The organisation’s resources and capabilities collectively build its unique competencies.

Cost & Differentiation Advantage

Competitive advantage is built through the use of resources as well as capabilities to attain regardless of whether better value structure or a differentiated product or service. Michael Porter developed a Matrix applying cost advantage, differentiation advantage, along with a broad or narrow focus in order to identify a collection of Generic Strategies that the organization can go after to develop   a competitive advantage.

Levels of Strategy ??

Strategy’s Three Key Challenges ?

Beyond Formulation: Results-oriented Strategy Leadership?

Strategic Planning: Overview, Significance & Outcomes 

The Strategic Planning Process: A Fundamental View

Value Creation

The organization builds value through carrying out a selection of pursuits that Porter defined as the Value Chain. Together with the organisation’s unique value building activities, the organization operates in a value system of vertical activities including the ones from upstream suppliers and downstream channel members.

To succeed in a competitive advantage, the organization is required to engage in more than one value building activities in a manner that generates significantly more  value compared to rivals.

Premium value is without question built through lower costs or better advantages to the consumer or client.

Vision, Mission, Value & Objective Statements: What & What Not?

PESTLE Analysis of the Macro-environment: Definition & Purpose

PESTLE Analysis: 6 Core Variables

SWOT Analysis: Definition & Primary Advantages

SWOT Analysis Framework: Internal & External Scan

Competitive Advantage: Cost Advantage & Differentiation

A Model of Competitive Advantage

Five Forces Model: Summary, Significance & Framework

Using The Five Forces Model In Industry Analysis

Generic Strategies: Concept, Framework, Performance & Risk

The Value Chain: Features, Phases, Merits  & Limitations

Value Chain Analysis: Primary & Support Activities

The “Product/Market Matrix”: 4 Unique Growth Strategies

The BCG Matrix: “ Business Growth- Market Share”