Sustainable Competitive Advantage

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What is a Sustainable Competitive Advantage (SCA)? Meaning.

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.

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Forum about Sustainable Competitive Advantage. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.

🔥 Tool for Diagnosing the Sustainability of a Business' Competitive Advantage
There are many authors who have focused on how to achieve a competitive advantage. Porter's book published in 1998 is one of the most famous in this field. However, I have found that over the last cou...
Comments15 comments
topic Sustaining your Competitive Advantage Means Ongoing Change
Maintaining or sustaining your competitive advantage actually means making ongoing conscious agile decisions and direction changes in response to changes in reality, in the environment (including comp...
Comments1 comments
topic 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 ...
topic 2 Different Meanings of the Term 'Sustainability'
Note there is a confusion existing in the word "Sustainability"! - There is the discussion about creating and capturing value based on competitive advantage, ensuring that this advantage does not dis...
topic Sustainable Competitive Advantage for Technology-based (Internet) Firms
A survey on all 29,688 companies listed on U.S. Stock market from 1960 to 2009 revealed that recent firms, listed from 2000 to 2009, are dying more quickly than older ones, listed before 1970. On a...

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🥇 Sustainable Competitive Advantage and Increasing Profit
Is a Sustainable Competitive Advantage important to make more profit?...
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🥈 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 a...
Comments18 comments

🥉 Transient Advantage
According to Colombia BS Professor Rita Gunther McGrath, achieving a Sustainable Competitive Advantage (SCA) (establishing a unique competitive position that can be sustained for long periods of time)...
Comments15 comments

Expert Tips

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Sustained Competitive Advantage

Industry Competitiveness
As claimed by M. Porter the only way to sustain a competitive advantage is to upgrade it over time – to move to more sop...

Factors to Create a Sustainable Competitive Advantage

Porter's SCA Factors
In HBR article “What is strategy”, Nov-Dec 1996, M. Porter discusses the critical factors that help to create a sustaina...

The Key Role of Strategists in Creating Competitive Advantage

Business Strategy, Corporate Strategy, Competitive Advantage, Strategy Education
Most organizational performance theories assume that there are certain “best practices”, or “best ways” that are needed ...

Extreme Customer Trust as a Source of Competitive Advantage

Competitive Advantage, CRM, Customer Loyalty, Customer Intimacy
Many companies are already highlighting the importance of trustworthiness by setting and sustaining honest prices and pr...

The Key Role of Strategists in Creating Sustainable Competitive Advantage

Business Strategy, Corporate Strategy, Competitive Advantage, Strategy Education
Most organizational performance theories assume that there are certain “best practices”, or “best ways” that are needed ...
Information Sources

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Two Recent Trends in Leadership

Leadership Development, Leadership Styles, Coaching, Mentoring, Servant Leadership, Vision, Business Model Innovation
Business thought leader John Spence presents 2 important trends in leadership: BEHAVORIAL: Spence argues there is a mo...

How to Sustain Competitive Advantage?

Business Strategy, Sustaining Competitive Advantage, Sustainable Competitive Advantage,
This presentation is about the question how a competitive advantage can be sustained. The presentation begins with compe...

Developing a (Sustainable) Competitive Advantage

Competitive Advantage, Sustainable Competitive Advantage, SCA, CA
This presentation outlines how to develop a business model for sustainable competitive advantage. The presentation inclu...

Porter: Misconceptions about Strategy and Competitive Advantage

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

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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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