Management > How to sustain competitive advantage

A long-term success of any competitive strategy requires it to be sustainable on the long run. It must resist both competitors’ actions and naturally occurring changes in the industry. To sustain a competitive advantage is a great challenge to today’s companies because of the ever-changing environment. Changes in technology, changes in consumer preferences demand all companies to be able to adapt to the new circumstances in order to stay competitive. Also if a company’s product has been known to be successful, competitors will most likely try to imitate its achievement by copying that particular product.

Management however has its tools to create obstacles that make imitation by competitors difficult or reduce competitive opportunities. These tools include patents, copyrights, and trademarks. Companies can also defend themselves by creating brand equity, good reputation, or a steady customer base. Also when there are efficiencies from economies of scale, reducing prices to sell more products is a well-known tactic. There are many other things a company can do to limit competition, like tying up suppliers with restricted contracts or lobbying for changes in government policies to impose tariffs on imported goods. These measures are all designed to keep a company competitive, and to help them sustain their competitive advantages.

There is one important rule nevertheless that a successful company has to keep itself to, and it’s that they should never be completely satisfied with what they achieved. Sitting on past or present successes can mean the end of an organization’s victories, and can cause serious problems. Sustaining competitive advantage requires constant adjustments to the ever-evolving environment by a company’s leadership (Robbins and Decenzo 93). These changes will enable the company to always stay a step ahead of its competitors. This environment includes all customers and their ever-shifting preferences, competitors that have to be watched all the time, political and economical changes, new market opportunities, industry structure.

Competitive advantage exists when a firm is able to deliver the same or improved benefits as competitors do, but either at a lower cost, or through product differentiation. A company follows a cost-leadership strategy when it produces goods and services with the same benefits as competitors do, but intends to and able to sell it at a lower price. Common ways of achieving a cost advantage is through efficient operations, economies of scale, technological innovations, low-cost labor, or acquiring reasonably priced raw materials. The other strategy to achieve competitive advantage is through product differentiation. This means that the firm is trying to create a product that is exclusive in its industry. It might focus on a superior quality or service, original design, or an extraordinarily positive brand image. The following is Hector Gorosabel’s assessment about Coca Cola’s worldwide success, and as we can see it has a lot to do with creating a uniquely positive brand image. "Exactly what the brand means is a difficult question for Coca-Cola, since the brand has the unique ability to connect with people on a variety of emotional and functional levels. I can tell you that we believe the brand stands for authenticity, for refreshment, and for enjoyment. But I can also tell you that people who drink Coca-Cola often do so because of the enduring, emotional and refreshing connection they have with the brand."1 Competitive advantage is generally beneficial for the customers and the companies as well. The customers receive ever improving products usually at a competitive price, while companies are able to generate higher profits.

In order to sustain a competitive advantage, a company has to have the right product or brand, but also has to be able to adapt to the dynamic environment it’s doing business in. A competitive advantage enables businesses to survive against their competitors over an extended period of time. That is if those companies are able to maintain their advantages through continuous innovation and faster adaptation to the environment. They must build upon their company’s competitive advantage and must always be reinvented based on the organization’s resources. A company constantly needs to develop its existing resources and capabilities and create new ones in a response to the rapidly changing market conditions. The company’s biggest challenge is to stay ahead its competitors, and to stay current with the times.

Printer Friendly Version or get for quick editing, exporting, sharing