Find your competitive advantage

COMPETITIVE ADVANTAGE

RESUMEN

Una ventaja competitiva duradera es esencial para el éxito a largo plazo de cualquier empresa, permitiéndole destacar y mantenerse por encima de sus competidores en el mercado. Esta ventaja, difícil de imitar o copiar, atrae inversores, asegura la rentabilidad y resiste la competencia. Ejemplos clave incluyen tecnología patentada, marca reconocida, economías de escala y redes de distribución eficientes.

Para desarrollar una ventaja competitiva, es crucial analizar el mercado, entender las necesidades del cliente, innovar y medir el desempeño constantemente. Herramientas como el análisis DAFO y las 5 fuerzas de Porter son fundamentales en este proceso. Una ventaja competitiva efectiva debe ser única, duradera, y netamente superior a la competencia, diferenciándose claramente para los clientes. Estrategias de corto plazo como precios bajos temporales o promociones no sustentan una ventaja competitiva a largo plazo

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Descubre Cómo Mantener Una Ventaja Competitiva Duradera en Tu Negocio

A lasting competitive advantage is a unique and differentiating characteristic of a company that allows it to stay ahead of its competitors in the market for a prolonged period of time. This advantage is difficult for other firms to copy, imitate or match, enabling the firm with such an advantage to maintain its superior market position.

A lasting competitive advantage is not only temporary, but also sustainable over time, meaning that the company can continue to benefit from it even when market conditions change or new competitors emerge. All successful businesses have at least one competitive advantage, which you should identify before you start your business.

Cómo Atraer Inversionistas con Una Ventaja Competitiva Clara

Investors need to clearly see your advantage in order to decide to invest in your project. If you don't have an identified advantage and the path (strategy) to get there, your project is not viable - that's how hard it is! Having a competitive advantage in your company is what will make you stand up to the competition and make your project a success.

A firm has a competitive advantage when it is in a better position to defend itself against other firms in the industry, against negotiations with customers and suppliers, and against the threat of substitute products or services. It consists of a differential value that puts a company in a superior position compared to its competitors.

This concept was created by the marketing expert, Michael Porter, to refer to that differentiation that is achieved in relation to other companies in the sector, and that allows you to be better than your competition.

Some examples of lasting competitive advantages may include

Patented technology:

If a company possesses a patented technology that is difficult to replicate, this can provide a lasting competitive advantage in terms of efficiency, quality or innovation.

Strong and recognised brand:

A well-established and recognised brand can be a lasting competitive advantage if consumers consistently associate the brand with quality, reliability and value.

Economies of scale:

Companies that can take advantage of economies of scale to reduce their production costs and offer lower prices than their competitors can have a lasting competitive advantage in terms of costs.

Efficient distribution network:

An efficient and well-established distribution network can be a lasting competitive advantage, as it allows the company to reach its customers faster and more efficiently than its competitors.

Culture and work team:

A strong organisational culture and a highly skilled and committed workforce can be a lasting competitive advantage by enabling the company to adapt quickly to changes in the market and to develop innovative products or services.

A lasting competitive advantage is critical to the long-term success of a company, as it enables the company to remain relevant and competitive in an ever-changing marketplace.

Why is it necessary for an entrepreneur to identify at least one competitive advantage for his new venture?

IT IS NECESSARY FOR AN ENTREPRENEUR TO IDENTIFY AT LEAST ONE COMPETITIVE ADVANTAGE FOR SEVERAL KEY REASONS:

Differentiation:

A competitive advantage allows the company to differentiate itself from its competitors and stand out in the market. By offering something unique and valuable that others cannot match, the company becomes more attractive to customers and can capture a larger market share.

Attracting investors:

Investors are looking to invest in projects with potential for success and profitability. If an entrepreneur can demonstrate that their business has a clear competitive advantage, investors are more likely to be willing to finance their project, as they see a higher potential return on investment.

Long-term profitability:

Companies with lasting competitive advantages are more likely to be profitable in the long run. By staying ahead of their competitors, these companies can generate sustained revenues and stay in business over time.

Resistance to competition:

A competitive advantage protects the firm from competition by making it more difficult for competitors to copy or match its value proposition. This allows the company to maintain its position in the market and remain relevant even when new competitors emerge.

Clarity of focus and direction:

By identifying a competitive advantage, an entrepreneur can focus resources and efforts on developing and strengthening that advantage. This provides a clear direction for the business and helps ensure that decisions are made in alignment with the long-term purpose and strategy.

In short, identifying a competitive advantage is crucial for an entrepreneur, as it provides a solid basis for the success of the company, attracts investors, ensures long-term profitability and enables the company to withstand competition and maintain its position in the market.

Practical examples of competitive advantages that are difficult to copy

Here are some practical examples of competitive advantages in different industries.

SEEING EXAMPLES OF ADVANTAGES IN OTHER COMPANIES CAN HELP YOU UNDERSTAND WHAT IT IS:

  • Google:

Su ventaja competitiva es el algoritmo de búsqueda que da tan buenos resultados.

  • Inditex:

Tiene muchas ventajas competitivas en su proceso productivo (copia rápida, sistema informático que le permite trabajar contra la demanda y no contra stock, fabricación pull, fuerte poder negociación con el proveedor…).

  • Apple:

Design and user experience

Apple has distinguished itself in the consumer electronics market by delivering products with innovative designs and an exceptional user experience. Their focus on high-quality hardware and software integration, coupled with a strong ecosystem of apps and services, creates a competitive advantage that allows them to stay ahead of their competitors.

  • Amazon: Logistics and distribution

Amazon has built a competitive advantage in the e-commerce industry through its strong logistics and distribution network. With a wide variety of products, competitive pricing and fast delivery, Amazon has positioned itself as a market leader, enabling them to attract and retain customers.

  • Tesla: Innovation in electric vehicles

Tesla has gained a competitive advantage in the automotive industry by focusing on innovative electric vehicles and battery technology. Its leadership in the development of high-performance electric vehicles and a growing network of charging stations has established Tesla as a leading brand in the electric vehicle space.

  • Coca-Cola: Brand and Customer Loyalty

Coca-Cola has a competitive advantage in the beverage industry through its iconic brand and customer loyalty. The company has invested in marketing and advertising over the years to build a strong and globally recognised brand, which allows them to stay ahead of their competitors in the beverage industry.

  • Netflix: Original content and streaming platform

Netflix has created a competitive advantage in the entertainment industry by focusing on producing original content and creating a user-friendly streaming platform. This strategy allows them to offer a wide variety of high quality content and keep subscribers engaged, resulting in a competitive advantage over other content providers and streaming platforms.

These examples illustrate how different companies in various industries have identified and leveraged their competitive advantages to achieve success in the marketplace. The key is to find and develop a unique and sustainable advantage that allows the company to differentiate itself and stay ahead of the competition.

How should you look for a competitive advantage in your new venture?

Seeking a competitive advantage involves identifying and developing unique and valuable characteristics that enable your company to stand out from the competition.

HERE ARE SOME STEPS YOU CAN TAKE TO SEEK A COMPETITIVE ADVANTAGE:

Market and competition analysis (+): 

Research and analyse the market in which your company operates, as well as your competitors. Identify the strengths and weaknesses of your competitors and determine where you can improve or outperform them. Also assess the opportunities and threats in the market. 

Identify your strengths (+):

Reflect on your company's unique strengths and skills. These may be technical skills, industry experience, market knowledge, financial resources, supplier relationships, and so on. These strengths can serve as the basis for developing a competitive advantage.

Study the needs of clients:

Understand your customers' needs and preferences. Investigate what they value, what problems they face and how you can meet their needs more efficiently or effectively than your competitors. The key to finding a competitive advantage is to focus on how you can deliver superior customer value. 

Innovation and continuous improvement (+):

Develop innovative products, services or processes that differentiate you from the competition. Innovation can be a key driver for creating competitive advantage by enabling you to offer unique and valuable solutions to your customers. Moreover, continuous improvement will help you maintain and strengthen your competitive advantage over time. 

Strategy and positioning (+):

Define a clear strategy and market positioning that is based on your strengths and your customers' needs. The right positioning will allow you to effectively communicate your competitive advantage and differentiate yourself in the marketplace.

Measurement and monitoring:

Establish key performance indicators (KPIs) to measure the success of your competitive advantage. Monitor your company's performance against these KPIs and adjust your strategy as necessary. This will ensure that your competitive advantage remains relevant and effective over time.

In short, seeking a competitive advantage involves analysing the market and competition, identifying your strengths, understanding customer needs, innovating, defining a clear strategy and monitoring your performance. By following these steps, you can develop and maintain a competitive advantage that allows you to stand out and succeed in the marketplace.

SOME TOOLS TO FIND YOUR EDGE:

TOOLS TO SEEK COMPETITIVE ADVANTAGES:

There are several tools and techniques that can help you identify and analyse your company's competitive advantages.

SOME OF THE MOST COMMON AND EFFECTIVE ONES ARE:

SWOT analysis (+):

SWOT (Strengths, Weaknesses, Opportunities, Threats and Opportunities) analysis is a tool that allows you to assess your company's internal strengths and weaknesses, as well as external opportunities and threats. By understanding these elements, you can identify potential competitive advantages and develop strategies to take advantage of them. 

Porter's 5 forces (+):

This framework, developed by Michael Porter, helps you analyse the industry and competition in which your company operates. The five forces include rivalry between existing competitors, the threat of new competitors, the threat of substitute products or services, the bargaining power of customers and the bargaining power of suppliers. Understanding these forces will enable you to identify areas where you can develop a competitive advantage.

Market growth matrix (BCG) (+):

The market growth matrix, developed by the Boston Consulting Group, is a tool that allows you to analyse the position of your products or services in the market in relation to the market growth rate and relative market share. This will help you identify areas where you can develop competitive advantages and make strategic decisions.

Value analysis (+):

This tool helps you analyse and understand how your business creates value for your customers. By identifying the key activities and processes that create value, you can develop a competitive advantage focused on these aspects.

Value chain analysis:

Developed by Michael Porter, value chain analysis allows you to examine the internal activities of your business and how these activities generate value for customers. By identifying the areas in which your company is efficient and effective, you can develop a competitive advantage based on these activities.

Canvas model (+):

The Canvas model is a visual tool that allows you to describe, design and analyse your company's business model. By mapping the nine key elements of the business model, you can identify areas where your company has competitive advantages and areas where it can improve.

Benchmarking (+):

Benchmarking is a process in which you compare your company's performance and practices with those of competitors and industry leaders. This comparison allows you to identify areas where you can improve and areas where you already have a competitive advantage.

Search for market imperfections (+): 

In a perfect market, no company in the sector can make money. You have to take advantage of imperfections. The search for market imperfections can be a valuable tool for identifying opportunities and developing competitive advantages. Market imperfections are situations where the market does not function efficiently, leading to opportunities to improve customer satisfaction and firm profitability. Common market imperfections include asymmetric information, barriers to entry, externalities and lack of competition. 

Using competitive strategies:

Generic competitive strategies, developed by Michael Porter, are a framework for identifying and developing competitive advantages in your business. These strategies include cost leadership, differentiation and focus.

HERE ARE SOME WAYS TO FIND COMPETITIVE ADVANTAGES USING THESE STRATEGIES:

Cost leadership:

The goal of this strategy is to become the lowest cost producer in your industry. You can achieve this through production efficiency, economies of scale, innovative technologies and effective supply chain management. By offering lower prices than your competitors and maintaining reasonable profit margins, you can attract more customers and gain market share.

Differentiation:

Differentiation strategy involves offering unique, high-value products or services that stand out from the competition. This may include design features, superior quality, exceptional customer service or a strong brand image. By offering something that your competitors cannot match, you can attract customers willing to pay a premium price for your product or service.

Focus or specialisation:

Focus strategy involves concentrating on a specific market niche and catering to the unique needs and preferences of that segment. You can achieve this by customising products or services, developing expertise, or building strong relationships with customers and suppliers in that niche. By specialising in a niche market, you can establish a reputation as a leader in that segment and enjoy higher customer loyalty.

Value chain integration:

By analysing and optimising your business value chain, you can identify key areas where you can develop competitive advantages. This may include adopting innovative technologies, improving internal processes, building strategic alliances or optimising your distribution and communication channels. By improving efficiency and value at every stage of the value chain, you can offer a superior value proposition to your competitors.

To find competitive advantages through these strategies, it is essential to understand your industry and your target market. Research your competitors, market trends and customer preferences to identify areas where you can outperform your competitors. Then choose and apply one or more of these generic competitive strategies to develop and maintain your competitive advantage. competitive advantages in the market (see+ TIP).

These tools and techniques can help you identify and analyse your company's competitive advantages. Use these tools together to gain a complete picture of your market position and develop effective strategies to leverage your competitive advantages.

I suggest that you use all these tools, each of them can contribute something to you

FOR EXAMPLE:

An exclusive communication channel, a unique way of relating to you, a very special key activity (your CORE), alliance with a strategic partner

  • Competition map (+), you can find your blue ocean, a segment of customers dissatisfied with the current offer.
  • SWOT analysis of your company with respect to the environment, or of your company with respect to the leading companies in your sector.

If I am able to avoid the competition, I no longer need a competitive advantage. blue ocean strategies (+). It is not easy and you will have to spend a lot of time until it becomes clear to you.

ONLY COMPANIES WITH A COMPETITIVE ADVANTAGE WIN

Setting up a company is very easy, the hard part is to be successful, i.e. to be among the first in the sector with a good position that is unbeatable by the competition. Look at life in your sector. New firms enter to compete and at the same time other firms exit and die.

Companies in the sector that do not have any advantage are ZOMBIES (see+ TIP), living dead who make money only when the sector is doing well for everyone, but who lose when the cycle goes down... and it goes down every x years for sure.

At the top of the sector, "GACELA companies (see+ TIP), There are only those that maintain a competitive advantage and that is where you have to aim.

REQUIREMENTS FOR YOUR COMPETITIVE ADVANTAGE

Within a mature sector, established companies gain an advantage when they do something different within the traditional process that gives them an exponential advantage over any competitor.

Even if it is a small change, the companies most concerned about their advantage are accumulating differences that make them unbeatable for the rest of the competing companies.

You can also slowly gain a little bit of a head start, eventually the company will grow until competitors can't catch up with you. However, at the moment when you are setting up your new company, it is when you have to make an extra effort to discover a big competitive advantage.

You have to find your differentiating element that will make our customers' lives better. customers (+) choose us over our competitors. There are a few things to consider in order to choose the right advantage for your business.

TO BE TRULY EFFECTIVE, YOUR COMPETITIVE ADVANTAGE MUST BE:
  • Durable in the long term, i.e. difficult to match by those who come along to copy you, that you can maintain it
  • Unique, unlike any other competitor in your sector.
  • Clearly superior to the competition, the customer has to see the difference. You meet their needs better or solve their problems better, or more cheaply.

Examples that are not truly competitive in the long run

There are certain advantages that may appear competitive at the outset but are not sustainable in the long term. These advantages can be easily replicated or neutralised by competitors, making them less effective over time.

EXAMPLES OF ADVANTAGES THAT ARE NOT TRULY COMPETITIVE IN THE LONG TERM INCLUDE:

Temporary low prices:

Offering lower prices than competitors may initially attract customers, but if these prices are not based on a sustainable cost advantage, competitors are likely to also lower their prices and neutralise this advantage.

Promotions or discounts:

Promotions and discounts may increase sales in the short term, but they are not a solid basis for a long-term competitive advantage. Competitors may also offer similar promotions, and customers may become less loyal if they only buy because of discounts.

Technology rapidly becoming obsolete:

While technological innovation can be a source of competitive advantage, technologies that quickly become obsolete may not provide a sustainable advantage. Competitors may adopt more advanced technologies or develop alternative solutions that outperform yours.

Dependence on a single customer or supplier:

If your business is heavily dependent on a single customer or supplier, this may appear to be an advantage in the short term. However, this dependence also makes you vulnerable to changes in their needs or the loss of that customer or supplier, which undermines the sustainability of the advantage.

Mediocre product quality:

If your competitive advantage is based on offering a slightly better quality product than the competition, this may not be sustainable in the long run. Competitors can easily improve the quality of their products to match or surpass yours, thus eliminating any advantage.

Aggressive advertising or marketing:

While aggressive advertising and marketing may generate interest in your product or service in the short term, this strategy may not be sustainable in the long term if it is not backed up with high quality products or services and a strong value proposition.

Temporary legal or regulatory advantages:

If your business benefits from a legal or regulatory advantage, such as a patent or exclusive licence, this may be temporary. Once the patent expires or regulations change, competitors may enter the market and erode your advantage.

In order to establish a real and lasting competitive advantage over the long term, it is essential to identify and develop advantages that are difficult to replicate, sustainable over time and valuable to customers.

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Picture of Jaime Cavero

Jaime Cavero

Presidente de la Aceleradora mentorDay. Inversor en startups e impulsor de nuevas empresas a través de Dyrecto, DreaperB1 y mentorDay.
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  1. TYPICAL CAUSES OF FAILURE - Mentor Day WikiTips

    [...] it is also creating another company in the sector, without competitive advantage, a ZOMBIE company, which only wins when the sector is doing well and all the competition wins, where [...].

  2. Define your competitive strategy - Mentor Day WikiTips

    [...] first fundamental step before identifying your strategy is to be clear about the competitive advantage you want to achieve for your new [...].

  3. IDENTIFY ALL YOUR COMPETITION - Mentor Day WikiTips

    [...] there are a few competencies that maintain their profits through their competitive advantage. The blue ocean strategy offers alternatives so that we are not affected by the degree of [...]

  4. HOW TO CHOOSE THE COUNTRY? - Mentor Day WikiTips

    [...] product must have some competitive advantage over the same or similar local products. These advantages can come from the product itself [...]

  5. CUSTOMER SATISFACTION - Mentor Day WikiTips

    [...] Engagement is the strategy that provokes a feeling in the customer that drives them to choose us over other alternatives, the competition. This is a great competitive advantage. [...]

  6. Business opportunities - Mentor Day WikiTips

    [...] for this opportunity to be sustainable in the long term, you need to find a competitive advantage that will guarantee your [...]

  7. José Luis Prieto Calviño

    It consists of a differential value that puts a company in a superior position compared to its competitors.

    1. Jaime Cavero

      Jose Luis thank you for your clarification

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