Competitive Advantage Essay

2202 Words9 Pages
Corporate Strategy

"Sources of competitive advantage rarely yield added value that can be sustained over time."

The following essay is going to attempt to assess the above proposition and try to find if it is possible to add value continually over a period of time. I will first discuss what competitive advantage is and what it means to a firm. Then I will explain the sources of competitive advantage and how the distinctive capabilities of a firm allow it to sustain added value. The discussion is based on a number of viewpoints from different authors who will be clearly indicated and acknowledged. I begin with explaining what competitive advantage is.

So, what is Competitive Advantage? In a number of industries, the average
…show more content…
Kay (1995) points out, "Architecture depends on the ability of the firm to build and sustain long term relationships...it is easier to sustain architecture than to set out to create it."
More than the other sources of competitive advantage, the sustainability of architecture rests on the level of skills of senior mangers. The first major step for the managers is to recognize the nature of the firm's architecture and the function it plays in the markets the firm serves. Kay argues that there are two main types of distinctive capability based on architecture,. Firstly, the firm's architecture may generate a flow of innovations which forms a sustainable advantage. Secondly, the architecture of the firm may allow the firm to successfully adopt new technology sooner and more efficiently than it's competitors.

The second primary distinctive capability is Reputation. This is the most important commercial mechanism for conveying information to consumers. The process of building up a reputation can br accelerated by staking a reputation which has been established in a related market. Once the firm's reputation has been created, it will have an advantage competing for new customers and further strengthening it's reputation. However, reputation is difficult and costly to establish and in order to
Get Access