Competitive advantage
In economics , the term competitive advantage denotes the lead of an actor on the market over its competitors in economic competition .
definition
According to Gordon (1959) one assumes a competitive advantage if an organization or a company can produce a product or a service with lower opportunity costs than its competitors.
This very 'finance heavy' definition becomes clearer using the definition given by Robert M. Grant (a recognized strategy expert in the 1990s):
" When two or more firms compete within the same market, one firm possesses a competitive advantage over its rivals when it earns a persistently higher rate of profit (or has the potential to earn a persistently higher rate of profit).
When two or more firms compete in the same market, one firm has a competitive advantage over its rivals if it sustained a higher profit rate (or has the potential to achieve a higher profit rate). "
Grant emphasizes the essential points of the business management approach
- competitor
- Pursuit of profit
- Sustainability (not in the sense of ecological sustainability , but as repeatability of profits)
These three factors appear in most of the definitions of competitive advantage. It is important to note here that business profit can be defined very differently, e.g. B. short term or long term, book profit vs. Cash flow , so that grants per se require a clear definition in practice a clarification of the factors considered.
Market structure analysis (ME Porter)
The competitive advantage can be divided into a supplier advantage that is generated in the company (e.g. lower production costs , which lead to higher profits ) and a customer advantage that the company generates on the market. The supplier advantage can be divided into revenue advantage (increase the sales price through e.g. image advantages ) and cost advantage (lower production costs). The customer advantage can be further divided into a benefit advantage (better products) and a cost advantage (lower price).
Some of the most important works on the strategic development and use of competitive advantages ( competitive strategy ) come from Michael E. Porter . In an empirically supported analysis ( The Competitive Advantage of Nations ), he also applied the concept of competitive advantage to regions and countries, thus giving the catchphrase international competitiveness a scientific foundation.
While Porter argues from his market structure considerations , more recently researchers have followed the strategists of the military and have put resources at the center.
The resource approach
Among other represents John Anderson Kay Resource approach to strategy , in which the available resources and skills (English, capabilities ) the essential basis for competitive advantages form (see Fig. 'S core competence ).
Kay describes three distinguishing capabilities (English, distinctive capabilities ; elsewhere core competencies ), composed of the cumulative from the accumulation experience, knowledge and systems within an organization, and to reduce costs, speed in developing new resources or extension existing ones come into effect.
- Reputation ... builds on the relationship between the organization, suppliers and customers. A special reputation e.g. For reliability, fast service, etc. is a source of competitive advantage where a buyer rates the organization's reputation higher than that of a competitor when placing an order. Reputations are also 'perishable' sources of competitive advantage; H. Reputations that are not maintained tend to fall apart ( whoever does not advertise dies ).
- Architecture (Engl. Architecture ) Kay calls the network of internal and external relationships between staff, customers, suppliers to communicate through the knowledge, information and organizational routines.
- Innovation can be a source of competitive advantage if it provides the organization with the means to compete more efficiently by offering products that represent more value to the customer or that new competitive opportunities can be opened up (e.g. new distribution channels). However, innovation is only a source of competitive advantage if it cannot simply be imitated or surpassed by 'alternative innovations'.
In addition to these distinctive skills, there are resources that Kay has argued that create competitive advantages. Kay names three such strategic assets :
- natural Monopole (engl. natural monopolies ) such. B. economies of scale or closed system compatibility such as the Windows operating system from Microsoft , or the proximity to high-quality or particularly inexpensive production factors (raw minerals, work pool with special skills, research laboratories or cheap labor).
- Opportunity cost (engl. Opportunity cost ) such. B. Previous investments in machinery and equipment (e.g. a refinery ), knowledge or skills acquired (e.g. the management of large and complex projects).
- Exclusivity (Engl. Exclusivity ) such. B. exclusive import or distribution rights, licenses to use certain technologies or protection.
In the theoretical discussion, the resource approach is the most modern development of strategy research in business administration. Its value lies (as in the case of military strategy formation) primarily in the area of resource analysis
- What resources are available?
- Which resources are missing to achieve the goals?
- Which resources have no strategic relevance and must be omitted?
and in the field of strategic planning, e.g. B.
- Procure specific machines or non-specific machines
- Apply broad or concentrated training
- Internationalize or export
- etc.
The aim of the observation is to achieve a competitive advantage ( long-term higher profit potential ) through the unique combination of resources, knowledge and people in the company.
See also
literature
- MJ Gordon: Dividends, earnings and stock prices , Review of Economics and Statistics, May 1959; OUBS B821 Course Glossary
- Robert M. Grant: Contemporary Strategy Analysis . 3rd edition, Reprint 2000, Blackwell, Malden MA, ISBN 0-631-20780-5
- John Anderson Kay: Foundations of Corporate Success: how business strategies add value . Oxford University Press, Oxford 1993
- Michael E. Porter: Consumer Behavior, Retailer Power, and Manufacturer Strategy in Consumer Goods Industries , Doctoral Dissertation (unpublished) Harvard 1973.
- Michael E. Porter: Competitive Strategy. Techniques for Analyzing Industries and Competitors . Free Press, New York 1980. (Published in German as: Competitive Strategy: Methods for Analyzing Sectors and Competitors , Campus. Frankfurt am Main 1983)
- Michael E. Porter: The Competitive Advantage of Nations , New York 1990, ISBN 0-684-84147-9
- Hermann Simon: The secret winners: The success strategies of unknown world market leaders (hidden champions) . Campus Verlag, Frankfurt / New York 1996