Competitive Advantage: Analysis of Cost Leadership and Challenges

This report examines the concept of competitive advantage, emphasizing its significance in the market and linking it to Porter's theory, particularly cost leadership. It explores how companies can outperform competitors and gain a superior market position. The report highlights the importance of sustainable competitive advantage for enhancing efficiency and profitability. It also analyzes the challenges businesses face in the global market, including high competition and the need for a strong brand image. The report uses Nike as an example of a company that employs product differentiation to gain a competitive edge. The conclusion stresses the necessity of sustainable competitive advantage for organizational success and brand image.

Competitive Advantage

COMPETITIVE ADVANTAGE 1
Introduction
In this report, the discussion is made on the topic of competitive advantage in the market. It
contains the importance of competitive advantage in terms of cost advantage in the link of
porter’s theory. After the discussion on importance of competitive advantage, the analysis
will be done on the challenges that an enterprises might face in the global climate with the
business example.
Importance of competitive advantage
Competitive advantage is a situation or circumstances that put a company in a superior
position over its competitors. The organisation is allowed to outperform its competitors in
order to gain the benefits and the superior position in the market (Madsen, and Walker,
2015).
Creating the sustainable competitive advantage is essential for the company in the order to
enhance the efficiency and earns the high profit. As per the porter theory, the company
provides the low cost to consumers in order to attract the large consumers towards the service
(Mind Tools, 2018). Large number of consumer helps to earn the high profit and the
competitive advantage in the market. Efficiency is also enhanced by maintaining the balance
of cost of raw material, inputs and offering the selling price to consumers. The main aim of
the organisation is to earn the earn profit and grab the high market share. The objective of the
company can easily fulfil by adopting the cost leadership strategy of porters theory (Belton,
2017).

COMPETITIVE ADVANTAGE 2
Challenges face by the company
There are many companies operates in the similar nature of services. The company faces the
challenges of high competition due to its high competitors in the market. It is observed that
sometimes the organisation also suffer with the amount of loss due to offering low cost to
consumers (Conner, 2018).
At the global market, there are many global players who show their presence by obtaining the
sustainable competitive advantage. It is observed that at the global level, the main motive of
an organisation is to grab the market share with the high value of brand image. The brand
image of an organisation is an important paramount at the global level and that can be
achieved with the help of competitive strategies of Porters theory.
Example
Nike Shoes adopt the product differentiation strategy of Porters theory to gain the
competitive advantage in the market. It provides the various variety of product with new
designs. It achieves the success by grab the high market share in the shoes industry over its
competitor (Gregory, 2017).
Conclusion
At the end, it is concluded that the sustainable competitive advantage is necessary for the
organisation in order to achieve the success in the market. The company face the challenges
of low cost services at a certain level because it is beneficial in the terms of brand image. The
organisation also has an advantage of grab the high brand image.

COMPETITIVE ADVANTAGE 3
References
Belton, P. (2017) Competitive Strategy: Creating and Sustaining Superior Performance.
Macat Library.
Conner, C. (2018) The '8 Great' Challenges Every Business Faces (And How To Master
Them All). [online] Available from:
https://www.forbes.com/sites/cherylsnappconner/2013/03/04/the-8-great-challenges-every-
business-faces-and-how-to-master-them-all/#2e5b726d3891 [Accessed 13/4/19].
Gregory, L. (2017) Nike Inc. Generic Strategy & Intensive Growth Strategies. [online]
Available from: http://panmore.com/nike-inc-generic-strategy-intensive-growth-strategies
[Accessed 13/4/19].
Madsen, T.L. and Walker, G. (2015) Modern competitive strategy. McGraw Hill.
Mind Tools. (2018) Porter's Generic Strategies. [online] Available from:
https://www.mindtools.com/pages/article/newSTR_82.htm [Accessed 13/4/19].