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Competitive Advantage Concept
Competitive Advantage is a concept
developed by Michael E. Porter in his bestseller “Competitive Advantage”
and seeks to show the way how the chosen strategy and followed by the
organization can determine and support its competitive success.
The competitive advantage emerges
fundamentally from the value that a certain company can create for its
clients and that overcomes the production costs. The term value, here
applied represents what the clients are willing to pay for the product
or service; a higher value results from the offer of a product or
service with characteristics understood as identical to the ones of the
competitors but for a lower price or, alternatively, from the offer of a
product or service with benefits superior to those of the competitors
that compensate most than a higher price.
According to Porter, there are two basic
types of competitive advantage: the leadership in cost and the
differentiation, which, together with the competitive extent, define the
different types of generic strategies.
Porter also describes the basic instrument
to diagnose competitive advantage and to find ways of intensifying it:
the value chain. Through the value chain, the organization is divided in
its basic activities (investigation and development, production,
commerce and service) which help the identification of the competitive
advantages sources.
Translated from Portuguese
by Susana Saraiva, Portuguese-English and English-Portuguese translation
specialist. Contact: spams@sapo.pt.
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