Competitive Advantage

TRIHADI PUDIAWAN ERHAN - erhan1202@yahoo.co.id -

Universitas Pembangunan JayaProgram Strata Satu

© September 2014

Competitive Advantage

Firm’s ability to score profit above the average profitability for all firms in its industry

• Distinctive competencies– Firm-specific strengths that allow a company to gain

competitive advantage by differentiating its products

and/or achieving lower costs than its rivals

– Arise from resources and capabilities

Source of Competitive Advantage

Superior Quality

• Superior quality = customer perception of greater value in a specific product’s attributes• Form, features, performance, durability, reliability,

style, design

• Quality products = goods and services that are reliable and that are differentiated by attributes that customers perceive to have higher value

Superior Quality

•The impact of quality on competitive advantage

• High-quality products increase the value of (differentiate) the products in customers’ eyes

• Greater efficiency and lower unit costs are associated with reliable products

Superior Efficiency

• The quantity of inputs it takes to produce a given output

• Productivity leads to greater efficiency and lower costs

• Employee productivity

• Capital productivity

Superior Innovation

• The act of creating new products or processes• Product innovation

• Creates products that customers perceive as more valuable, increasing the company’s pricing options

• Process innovation• Creates value by lowering production costs

• Perhaps the most important building block of competitive advantage

Superior Customer Responsiveness

• Doing a better job than competitors of identifying and satisfying customers’ needs

• Superior quality and innovation are integral to superior responsiveness to customers

• Customizing goods and services to the unique demands of individual customers or customer groups

Superior Customer Responsiveness

• Sources of enhanced customer responsiveness• Customer response time, design, service, after-sales

service and support

• Differentiates a company/its products; leads to brand loyalty and premium pricing

© September 2014