Competitiveness and product differentiation strategies

¶ … competitive advantage can be described as what enables a business or company to thrive. It involves the combination of every component in the business model that enables the business to better meet the needs of its population while obtaining economic incentives from the process. Furthermore, competitive advantage can be considered as any activity or business initiative that a company performs well when compared to its major rivals in the industry or market. As a result, a business accrues competitive advantage when it carries out an activity that its competitors cannot do or when it owns something its competitors desire ("What is Competitive Advantage?" n.d.).

Competitive advantage has become an important aspect in the modern business world to an extent that it's a business buzzword. The significance of this concept is attributed to its role in strategic management and achievement of organizational objectives and profitability. As a result, businesses and companies face the need to create and foster competitive advantage to enhance their profitability. Some of the major measures taken to develop and nurture competitive advantage include constantly adapting to the changing business environment and developing, implementing, and assessing strategies.

As companies continue to focus on competitive advantage to enhance profitability and achieve business objectives, this concept has become central to the study of strategic management. One of the major reasons for the significance of this concept in strategic management is that competition between businesses is central to strategic management. Actually, the ability of a company to obtain competitive advantage over its rivals is based on development and execution of an effective strategy, which is the main focus of the study of strategic management.

This implies that a business is nearly unable to develop and nurture competitive advantage without the development and implementation of an effective business strategy. Therefore, strategic management can be regarded as the basic source of competitive advantage for businesses. The concept of competitive advantage is strongly linked to strategic management because the latter focuses on the reasons and processes with which companies and businesses outperform each other through competitive advantage (Dess, 2009, p.188). While competitive advantage is developed and nurtured through strategic management; strategic management is a process or study that is based on analysis of the competitive advantages of firms.

Strategic management provides explanations of how businesses attain competitive advantages over their rivals through three generic strategies i.e. focus, differentiation, and overall cost leadership. The main goal of explaining this process is demonstrate how successful generic strategies regularly improve the position of a business amidst the five industry forces. The study of strategic management also demonstrates the need for maintaining a company's competitive advantage because of imitation and substitution threats from existing or new competitors. This process may sometime involve the combination of two or more generic strategies.