What is a competitive advantage?

We have written many times on our blog about competitive advantage. We have also emphasised how important it is to conduct commercial negotiations, and then manage relationships, in a way that achieves it.

However, it is worth considering what competitive advantage actually is. And what are the most effective methods of achieving it.

What is a competitive advantage?

A competitive advantage is present when a company achieves a superior position in relation to its competitors. In practice, this means a situation where a company's products or services are more likely to be chosen by potential customers than similar products or services offered by other market participants.

Competitive advantage can be created through high cost-effectiveness, a level of product innovation or providing the most positive customer experience.

By having a competitive advantage, the company can generate higher margins and achieve better financial results.

Competitive advantage through suppliers

Suppliers can be a source of market competitive advantage. In many cases, a well-prepared and effectively implemented commercial negotiation strategy and relationship management allows greater efficiencies to be achieved, making it possible to offer the final product or service at a lower price. Such competitive advantage is called comparative advantage.

However, this is not the only benefit achievable through good supply area management. Working with innovative partners enables you to increase the innovation of your own products or services and build a quality advantage over your direct competitors.

It is worth remembering that practically it is impossible to develop a sustainable competitive advantage. It is therefore extremely important to constantly monitoring market trends i implementation of innovative solutions in the area of purchasing.