Competitive Advantage
Definition
Competitive advantage refers to the ability of a firm to outperform its competitors in terms of sales, market share, or profitability. It is achieved by offering superior products, lower costs, or unique marketing strategies.
Analogy
Imagine you and your friends are participating in a baking competition. Your competitive advantage could be that you have a secret recipe for the most delicious cookies (superior product), or you can bake them faster than anyone else (lower costs), or maybe you have a funny and catchy jingle to advertise your cookies (unique marketing strategy).
Related terms
Cost leadership: A competitive strategy where a firm aims to become the lowest-cost producer in the industry.
Product differentiation: The process of creating distinct features or attributes in a product that sets it apart from competitors' offerings.
Market share: The portion of total sales within an industry that is captured by a specific company.
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