Competitive advantage: sources, strategies, and organizational performance

Competitive Advantage

Both Greece and Spain are major tourist draws in Europe. According to the latest figures, Greece attracts 13.3 million visitors annually while Spain attracts 52.4 million visitors annually. Spain was #2 in the world for tourist arrivals, while Greece was #17 (WTO, 2005). Both nations attracted more tourist visits than they have citizens. Spain even ranked on the WTO chart of fastest-growing tourist industries, a list that holds few tourism heavyweights (WTO, 2005).

Competitive and Comparative Advantages

In terms of absolute advantages, Spain has many. It is the larger of the two countries, and thus has greater capacity. Greece has hotel capacity estimated at 700,000, while Spain has the world's largest hotel capacity.

In general, Spain has absolute advantages in tourism infrastructure. This includes international airports and train capacity in addition to hotels. Other advantages are its rental car system and ATM network, both well-suited for tourism (World Economic Forum, 2005) it is unknown which of the two countries has the greater cruise ship capacity, however, due to Greece's large number of islands.

There are several other areas where Spain has an absolute competitive advantage over Greece. The nation has more UNESCO World Heritage Sites. Greece has 17, but Spain has 40. Spain has more tourist-draw cities, such as Madrid, Seville, Barcelona and Cordoba. Spain has more museums, and more famous ones. Spanish food is more renowned. The Spanish language is understood by more people than is the Greek language, and the alphabet is more familiar.

That said, Spaniards are not much more likely than Greeks to speak English or other Germanic languages, which would be attractive to both countries' target markets.

Greece has absolute competitive advantage in terms of the number of diversity of islands. Where Spain has party islands, Greece has hundreds of islands catering to all tastes. The two countries both have a high amount of sunshine and warm weather, a key tourist draw.

In terms of comparative advantages, many of Spain's absolute advantages translate to comparative advantages. However, Greece has a few comparative advantages. The first one is with respect to the islands and sunshine. Greece specializes in this type of vacation. Not only does Greece have hundreds of islands, but they are sun-drenched and diverse. Spain is strong in this area as well, and their party islands attract more visitors than do Greece's, but Greece is relatively strong in this sphere.

Another area where Greece can claim a comparative advantage is on history. Spain has some excellent history, but the history of Greece is both older and more well-known. Greece ruins are ancient. They represent the foundation of Western civilization, which makes them more important, in general, than Spanish monuments, which are more regionally important. The Greek history is also more well-known. This gives Greece's history more context for tourists than the historic monuments of Spain. Again, this lends Greece a comparative advantage. Despite having fewer monuments, the quality of their monuments, and thus their tourist-drawing capabilities, is greater.

Greece also has a comparative advantage in conference tourism. This subset of the tourist market has been actively courted by the Greek government, whereas Spain focuses on sun-worshipping package holidayers. This has resulted in an increase in business travel to Greece.

Spain enjoys many other comparative advantages. Its infrastructure is among the best-developed in the world (World Economic Forum, 2005). Greece, on the other hand, has limited infrastructure relative to its tourist-draw capacity. The country is attempting to rectify this situation, but as yet progress is slow. Spain also enjoys comparative advantage with respect to art and food. Greece can claim a solid art history and decent food, but Spain is a world leader in both fields. Spanish output of artistic masterworks is among the best in the world and Spanish food is renowned as one of the world's great cuisines.

Therefore, we can see that many of Spain's key advantages are both absolute and comparative. Yet, the gap between Greece and Spain is not as great with respect to some traits of the tourism industry as it is with others. In these areas - history, islands, and conference tourism - Greece has a comparative advantage.

Products

For Greece, they can develop more conferences and attract a greater share of Europe's business travel market. This strategy works in a couple of different ways. First, Greece has a comparative advantage in conference travel. Spain is not actively courting this market, whereas the Greek government is. This strategy also allows Greece to leverage the power of its other strengths. Greece has as much sun as Spain, which while not a competitive advantage can be combined with the conference focus to enhance it. Additionally, Greece would also leverage its comparative advantage in history. A conference in Greece would afford the conference-goers an opportunity to do more than simply attend a trade show or meeting. They could take a few extra days to enjoy the sun and the sights. This would enhance the economic potential of the conference market.

The conference business is growing, recent economic troubles notwithstanding. Companies and industry groups are constantly seeking new, exciting destinations for their conference travel. Greece, with its traditional focus on island-tourism, is a new horizon for this market. Because Greece already has a substantial infrastructure and myriad attractions, it is able to easily absorb substantial market share increases in conferences.

While Greece is developing products based on their comparative advantages, Spain should continue to develop products based on their absolute competitive advantages. The nation can develop a new resort along the Mediterranean coast, following the lead of nations such as Mexico, Cuba or Jamaica, each of whom has added new destinations to their tourism brochures in recent years. For Spain, this new resort still plays on the sunshine and beaches. But it can be developed nearby to an existing tourist draw, to leverage Spain's strong infrastructure. We can see a parallel in Negril/Montego Bay, Jamaica, where the latter was developed to take advantage of a growing tourism industry in the former. Spain also has the opportunity to leverage its infrastructure and abundant natural gifts to combine a new resort town with an existing town, perhaps one that already has a strong draw of another type, such as cultural.

Economic Impact

For Greece, the economic impact of tourism is essential to the country's economy. Approximately 15% of Greece's GDP is attributable to the tourism industry. The conference business has until recent years made up very little of that. However, if Greece can capture a greater share of Europe's conference trade, it can expect to add $1 billion dollars to its tourism intake. This would represent an increase of 7.3% over tourism receipts in 2005, on top of the natural increase in receipts (WTO, 2005). Conceivably, Greece could add $5 billion in additional receipts just from new conference business.