Competitive Advantage

Competitive Advantage

This is an edge a business has over it's competitors.  A carefully crafted business plan can help in focusing the spotlight on the key strength areas of your business.

If you have found one, then by all means make a big thing out of it.  A clear example is cost.  Can you produce, supply, deliver a product or service at a lower cost? If yes, then you have a clear competitive advantage in that area.  If you have the ability to charge customers less or pay intermediaries more, and still make a reasonable profit, then you may have a price advantage over your competitors. A reduction in price is equal to gaining a larger market share, which is equal to more profit.

In the banking sector, banks that had excellent retail products enjoyed more deposit liability, therefore they had competitive advantage in terms of loan pricing because they could lend at a cheqper rate.  Also from the angle of technology, a bank with a robust mobile app for e-commerce and e-payment for instance clearly have a competitive advantage especially in the retail market over their competitors who still rely on conventional methods.

A competitive advantage has a life span.  You should quickly analyse the internal and external business environment and establish new ones. Research into cost, technology, brand, local monopoly, location, distribution and buying etc to establish new ones.