Competitive Analysis and SWOT
Developing Competitive Advantage
When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage.
Michael Porter identified two basic types of competitive advantage:
- cost advantage
- differentiation advantage
A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage).
Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself. Cost and differentiation advantages are known as positional advantages since they describe the firm's position in the industry as a leader in either cost or differentiation.
A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. The following diagram combines the resource-based and positioning views to illustrate the concept of competitive advantage:
A Model of Competitive Advantage
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Resources and Capabilities
According to the resource-based view, in order to develop a competitive advantage the firm must have resources and capabilities that are superior to those of its competitors. Without this superiority, the competitors simply could replicate what the firm was doing and any advantage quickly would disappear.
Resources are the
firm-specific assets useful for creating a cost or differentiation
advantage and that few competitors can acquire easily. The following are
some examples of such resources:
- Patents and trademarks
- Proprietary know-how
- Installed customer base
- Reputation of the firm
- Brand equity
Capabilities refer to the firm's ability to utilize its resources effectively. An example of a capability is the ability to bring a product to market faster than competitors. Such capabilities are embedded in the routines of the organization and are not easily documented as procedures and thus are difficult for competitors to replicate.
The firm's resources and capabilities together form its distinctive competencies. These competencies enable innovation, efficiency, quality, and customer responsiveness, all of which can be leveraged to create a cost advantage or a differentiation advantage.
Cost Advantage and Differentiation Advantage
Competitive advantage is created by using resources and capabilities to achieve either a lower cost structure or a differentiated product. A firm positions itself in its industry through its choice of low cost or differentiation. This decision is a central component of the firm's competitive strategy.
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Competitive Analysis Templates |
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Tool to Conduct & Prepare A Competitive Analysis Report - CA01 |
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SWOT Analysis Customizable Template - CA02 |
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Marketing Templates |
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Marketing Plan Document - REV08 |
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Marketing Budget Development Model - REV10 |
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Marketing Plan Presentation - REV09 |
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Guidelines and Tactical Plan For Trade Show Success - TS01 |
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Trade Show Expense Budget Development Model - TS02 |
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Sales Forecast Model I - REV02 |
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Sales Forecast Model II - REV03 |
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Product Requirements Definition - REV04 |
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Product Design Document - REV05 |
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Functional Specifications Requirement - REV06 |
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Product Launch Sequence - REV07 |
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Sales Plan Builder Tool I - REV01 |
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Sales Plan Builder Tool II - REV11 |
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Download Additional Amazing Competitive Analysis and Marketing Tools
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| Competitive Analysis Templates | Description |
| Competitive and Value Chain Analysis Workbook | A powerful Excel spreadsheet workbook with tabs providing models to undertake both competitive and value chain analysis. Even though it is for annual subscribers only, please click here to see the workbook in protected form. |
| How To Gather Competitive Analysis Information | Provides the steps and potential sources to use to gather the information necessary for a good competitive analysis exercise (PowerPoint) |
| Starbucks Competitive Analysis Example | A sample competitive analysis study using Starbucks as the company being studied (PowerPoint) |
| Marketing Templates | File Description |
| Marketing Campaign Workbook | Step-by-step action plan on the specific tactics of executing a marketing, branding, public relations campaign (Word Document) |
| Product Marketing Campaign Presentation | Presentation template with the step-by-step details on executing the marketing launch campaign for a product (PowerPoint Document) |
| Category Management Process | Details the steps and activities involved in developing and executing a category management process for a product or service (PowerPoint Document) |
| Developing Collateral Materials | A guide to how to develop effective marketing collateral materials (Word Document). In addition, visit our collateral development tools page for additional helpful aids. |
| Developing A Marketing Communications Plan | Need to get the word out about your product or company? This guide will help you develop an effective marketing communications plan (Word Document) |
| Marketing Planning Kick-Off | Ready to determine and set your marketing plan, strategies, and priorities? This presentation will get the team focused on to get the job done (PowerPoint Document) |
| Branding And Customer Segmentation | A tool to help you effectively handle branding and customer segmentation methods and issues (PowerPoint Document) |
| Strategic Marketing Plan | Blue print with step-by-step sections and line items description. Just fill in the blanks to develop a creative and effective strategic marketing plan (Word Document) |
| Marketing Crash Course | Can't seem to get off the ground with your marketing efforts? This crash course will give you the ideas to revup your engine! (PowerPoint Document) |
| Marketing Plan (Ver 2) | Another marketing plan template ,in addition to the one referenced above, to give you more choice and flexibility (Word Document) |