Unit 3: Creating Competitive Advantage
The success of a strategy depends on the firm's competitive advantage, or whether its position in a competitive market allows it to achieve its goals--which might include higher returns on investments, greater efficiency or superior effectiveness in comparison to competitors. What sets your product or service apart from the competition? Two generic strategies for developing a competitive advantage are cost leadership and differentiation. Cost leadership is a strategy that Walmart follows. This company aims to offer the lowest prices in order to draw in customers. Differentiation is a strategy designed to make your product or service so unique that it stands out from the competition in a desirable way to a target market. Nintendo launched the Wii video game console by differentiating their product with motion sensitive controllers. (This company pursued a cost leadership strategy in conjunction with this differentiation strategy.)
There are a number of ways to achieve competitive advantage, and they all require a focus on the competitors. It is important to keep this in mind when studying this unit. This unit's primary takeaway should be the concept of sustainable competitive advantage. As soon as your competitors see a strategy of yours working, they will either copy or leapfrog it. Sony immediately attempted to copy Nintendo by developing its own motion-sensitive controllers, and Microsoft has moved to motion recognition via cameras. Sustainable competitive advantage involves not only jumping ahead, but staying there.
Completing this unit should take you approximately 18 hours.