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10 November, 00:13

Should a company's strategy be tightly connected to its quest for competitive advantage? Why or why not? What difference does it makes whether a company has a sustainable competitive advantage or not?

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  1. 10 November, 00:38
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    The company's strategy should be planned towards making a product or service that satisfies the needs and desires of consumers as well as being competitive in the market towards achieving profit. It should be connected to developing a competitive advantage, but it is not it's primary objective.

    Explanation:

    Competitive advantages are conditions that allow a company or country to produce a good or service of equal value at a lower price or in a more desirable fashion. These conditions allow the productive entity to generate more sales or superior margins compared to its market rivals. This last part is very important, without superiors margins compared to market rivals there isn't a competitive advantage.

    Competitive advantages are attributed to a variety of factors including cost structure, branding, the quality of product offerings, the distribution network, intellectual property, and customer service.

    The company's strategy should be planned towards making a product or service that satisfies the needs and desires of consumers as well as being competitive in the market towards achieving profit. It should be connected to developing a competitive advantage, but it is not it's primary objective.

    Porter outlined the three primary ways companies achieve sustainable advantage. They are cost leadership, differentiation, and focus.

    The importance of a competitive advantage is what makes an entity's goods or services superior to all of a customer's other choices. This leads to greater sustainable profit margins.
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