In fourteen pages company strategic formations and competitive advantage determinations are examined in business examples and references to the models of Michael Porter, including the five forces. Ten sources are cited in the bibliography.
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to compete a company needs to develop a competitive advantage. He argues there are two ways to succeed in gaining a competitive advantage. This is by either gaining a cost
advantage or leadership, or by taking advantage of differentiation (Partridge et al, 1994). Cost leadership does not represent the prices of the
goods on the shelf, but the advantage that a manufacturer or provider has in being able to provide those goods or services at a lower price than the competitor, the
price may be the same, but the profit margins are higher with the producer sticking to average market prices (Porter, 1999). If the market does get increasing competitive they have
the additional resources to cope with the situation (Partridge et al, 1994, Reimann, 1989). In each sector only one company may have the cost advantage.
Alternatively, it is to differentiate their product, making it different from the competition and therefore more appealing to the end users (Partridge et al, 1994). This
is usually by adding value added features, making the product stand out from the crowd or tapping in to tome way of making the company seam different. There are many
ways that this advantages manifest, the advantage may be the companies reputation and image, the company may develop new products and seek the first mover advantage. Value added features are
features that are added to a product or service that will increase the premium the buyer is wiling to pay to a greater proportion than the cost of their addition.
This may be anything from the colour of the casing to functional features. Even the human capital within a company may be a source to a competitive advantage due to