Competitive advantage

• The concept of competitive advantage is an important one to understand in business
• Amazon dominates many e-commerce segments globally due to its competitive advantage
• What is Ikea's competitive advantage in the home furnishings market?

  Global leadership
• Nike sells approximately one in five pairs of athletic shoes in the US
• Google's dominance in online web searches is an example of competitive advantage
• What is the key characteristic of a sustainable competitive advantage?

  It cannot be easily replicated
• Competitive advantage leads to higher market share and increased profits
• What are the two primary types of competitive advantage?

  Cost and differentiation
• Steps to achieve a cost advantage

  1️⃣ Increase efficiency

  2️⃣ Enjoy economies of scale

  3️⃣ Lower unit costs
• A cost advantage always results in lower quality products

  False
• What does a differentiation advantage focus on?

  Customer-perceived value
• A business with a differentiation advantage may focus on quality, style, or customer service
• Competitive advantage is only achievable through cost reduction

  False
• What model can be linked to competitive advantage?

  Porter's generic strategies
• Match the type of competitive advantage with its description:

  Cost advantage ↔️ Lower unit costs

  Differentiation advantage ↔️ Higher perceived value
• What is the primary goal of a business when creating a competitive advantage?

  Superior value proposition
• Customers decide which products to buy by comparing the value proposition of competing items.
• A better value proposition can be a source of competitive advantage for a business.
• How many examples of creating a superior value proposition are discussed in the study material?

  Four
• One way to create a superior value proposition is to offer more for less than the competition.
• Which business is cited as an example of offering more for less due to efficiency and low unit costs?

  Ikea
• Offering more for less requires maintaining high quality while reducing prices.
• Another way to create a superior value proposition is to offer more for more than the competition.
• Which business is cited as an example of offering more for more by providing luxury products with prestige value?

  Rolex
• Businesses offering luxury products typically compete on lower prices to attract customers.

  False
• A third way to create a superior value proposition is to offer more for the same than the competition.
• Which product is cited as an example of offering more for the same by consistently improving features without increasing price?

  iPhone
• The price of an iPhone has remained constant over the years despite improvements in functionality.
• A fourth way to create a superior value proposition is to offer less for much less than the competition.
• Which business is cited as an example of offering less for much less by focusing on low prices and essential products?

  Primark
• Businesses like Aldi offer a wide range of products at significantly higher prices.

  False
• Match the business with its superior value proposition example:

  Ikea ↔️ More for less

  Rolex ↔️ More for more

  Apple ↔️ More for the same

  Primark ↔️ Less for much less