Sustainable Competitive Advantage

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Description of Sustainable Competitive Advantage. Explanation.

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Definition Sustainable Competitive Advantage (SCA). Description.


If a company makes a profit in excess of its Cost of Capital, it is probably able to do so because it has achieved a Competitive Position that offers some kind of an 'edge' over its current or potential rivals. To achieve such a temporary competitive edge is hard to do, and typically takes the successful formulation and execution of a business strategy. The 3 factors that can provide such a Competitive Advantage were famously described by Porter: Cost Leadership, Differentiation, and Focus. A different  approach was provided by Treacy and Wiersema in their Value Disciplines: Operational Excellence, Product Leadership and Customer Intimacy.


But to develop a competitive advantage into a sustainable competitive advantage is even harder to do, because this means that the company must possess value creating things or capabilities that cannot be duplicated or imitated by other firms (Competitive Defendability), nor can they be made redundant by developments in the environment (Environmental Consonance). Therefore SCA could be defined as the prolonged benefit of formulating and implementing some unique value-creating strategy not simultaneously being implemented by any current or potential competitors along with the inability to duplicate or imitate the benefits of this strategy and the absence of threatening market developments.


Sources of Sustainable Competitive Advantage.

In 1988, Day and Wensley mentioned two categorical sources involved in creating a competitive advantage: superior skills and superior resources (financial, physical, legal, human, organizational, informational, relational). Since then many  authors have elaborated on the specific skills and resources that can contribute to a SCA. Barney (1991) states that not all firm resources hold the potential of SCAs; instead, they must possess all of four attributes: Valuable, Rare, Imperfectly Imitable and Non-Substitutable ("VRIN"). See Resource Based View of the Firm.

Prahalad and Hamel suggest in 1990 that firms combine their resources and skills into Core Competences, loosely defined as that which a firm does distinctively well in relation to competitors. Therefore, firms may succeed in establishing an SCA by combining skills and resources in unique and enduring ways. 


Also called sustained competitive advantage.


Sustainable Competitive Advantage Forum
  Are you a Strategist? You have a Key Role in Creating Sustainable Competitive Advantage
Most organizational performance theories assume that there are certain “best practices” or “best ways” needed to outperform your rivals.
This seems to be true for some competitions, such as cookery and gardening.
But in competitions such as...
     
 
  2 Different Views Towards 'Sustainability'
Note there is a confusion in terminology:
- There is the discussion about creating and capturing value based on competitive advantage, ensuring that this advantage does not disappear quickly (sustainable competitive advantage).
- Also there...
     
 
  Can Customer Experience Create Sustainable Competitive Advantage?
Amazon sell books (well they started with books)...Zappos sell shoes (well they started with shoes)... Neither make what they sell...
Neither sell anything unique or competitively superior. Yet both dominate their respective business spaces.
...
     
 
  Sustainable Alignment?
What is sustainable alignment?...
     
 
  How to Define SCA of a Business?
How can we analyze information about a business such as its resources, capabilities, valuable, rare, imperfectly imitable, exploitable and so on...?...
     
 
  Sustainable Competitive Advantage and Increasing Profit
Is a Sustainable Competitive Advantage important to make more profit?...
     
 

Sustainable Competitive Advantage Special Interest Group


Special Interest Group

 

Best Practices - Sustainable Competitive Advantage Premium
  Transient Advantage
Acronyms
TA = Transient Advantage
CA =  
   
 

Expert Tips - Sustainable Competitive Advantage Premium
 

The Key Role of Strategists in Creating Sustainable Competitive Advantage

Most organizational performance theories assume that there are certain “best practices”, or “best ways” that are needed to outperform your rivals.
...
Usage (application): Business Strategy, Corporate Strategy, Competitive Advantage, Strategy Education
 
 

Resources - Sustainable Competitive Advantage Premium

How to Sustain Competitive Advantage?

This presentation is about the question how a competitive advantage can be sustained. The presentation begins with competitive advantage and moves fro...
Usage (application): Business Strategy, Sustaining Competitive Advantage, Sustainable Competitive Advantage,
 

Two Recent Trends in Leadership

Business thought leader John Spence presents 2 important trends in leadership:
  1. BEHAVORIAL: Spence argues there is a move from
 

Developing a (Sustainable) Competitive Advantage

This presentation outlines how to develop a business model for sustainable competitive advantage. The presentation includes the following sections: Usage (application): Competitive Advantage, Sustainable Competitive Advantage, SCA, CA
 

Porter: Misconceptions about Strategy and Competitive Advantage

Prof. M. Porter mentions some big mistakes when people are mixing up "strategy" with other kind of goals and objectives and issues that managers often...
Usage (application): Understanding Strategy and (Sustainable) Competitive Advantage
 
 

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Compare with: Barriers to Entry  |  Cost Drivers  |  Cost Dynamics  |  Cost Analysis  |  Oligopoly  |  Competitive Intelligence  |  Competitive Environment  |  PEST Analysis  |  First Mover Advantage  |  Second-mover Strategy

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