Custom «Sustainable Competitive Advantage» Essay Paper Sample

Sustainable Competitive Advantage

What is sustainable competitive advantage?

Sustainable competitive advantage can be described as a corporate strategy employed by business firms and organizations to maintain and improve competitive positions of their respective enterprises in a highly saturated market. It is actually an advantage that gives an upper hand for businesses to survive in an environment of stiff competition for along time period (Porter, 2006).    

What are the components that comprise a sustainable competitive advantage for a firm?

There are several components that comprise a sustainable competitive advantage. The first one is the resources and the capabilities of a firm. For a firm to develop and maintain a sustainable competitive advantage, it has to come up or posses capabilities and resources that are at least better or superior, as compared to the resources and capabilities of possessed by potential competitors in the industry. If this component is not achieved, the potential competitors can easily erase the available competitive advantage by simply replicating whatever the firm is offering to the market. Resources are actual assets that are firm specific and include trademarks, customer base, reputation and others like brand name or equity. On the other hand, capabilities imply the ability of the business firm to make efficient and effective utilization of its resources.  A good example of a capability is the ability of a business firm to bring its products close to target customers than competitors (Porter, 2006).

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The second component of sustainable competitive advantage is cost and differentiation advantage. This involves the ability of a firm to produce at a lower cost compared to its competitors thus able to sell at lower price. It also involves its ability to produce products that are different from those of competitors for differentiation advantage. A firm that is able to embrace and sustain these two factors is said to posses a sustainable competitive advantage against its potential competitors (Porter, 2006).

Another component of sustainable competitive advantage is creation of value. In order for a firm to attain a sustainable competitive advantage, it has to engage in one or more activities that create value, more than the overall value created by potential competitors. This component can be enhanced by creating value through methodologies that are of lower cost and impose superior benefits to the market (Porter, 2006).

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Other components of sustainable competitive advantage include work force, intellectual property law and barriers to entry. A work force that enhances competitive advantage can be enhanced by creating a human resource department that is integrated and intelligent is setting up a competitive workforce. Intellectual property law and barriers to entry are components of sustainable competitive advantage that create disadvantages for competitors trying to replicate or enter the market respectively (Porter, 2006).

How might these components vary for different industries?

These components varies for different industries based on the management strategies, marketing strategies, leadership styles and the overall plan of the business concerning market share and building customer base. These components also vary for industries in terms of physical, organizational and human resources available to create and sustain the components (Porter, 2006).

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How are they different today, in the 21st century as compared to the past?

In the past, most of the competitive advantage components were based on invention (totally new ideas) while today, most of these sustainable competitive advantage components are based on innovations (improvements on existing ideas) (Porter, 2006).

What are the risk factors involved if a firm fails to maintain a competitive advantage?

Incase a firm fails to maintain a competitive advantage, the risk factors involved include weakening of customer base (loss of customers), reduced profits and reduction in the overall performance of the business in terms of customer satisfaction and retention. It can also lead to closure of the firm (Porter, 2006). 

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