Competition. Impact of Comparative and Competitive Advantage on Competitive Position (Most Important)

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Competition. Impact of Comparative and Competitive Advantage on Competitive Position (Most Important)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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47. The impact of comparative and competitive advantages on competitive positions

There are two types of advantage: comparative advantage and competitive advantage.

Comparative Advantage ensure the competitiveness of the enterprise through sources such as labor, natural raw materials (land) and capital. In modern conditions, only the availability of labor, capital and raw materials do not ensure the competitiveness of the enterprise, because they have become widely available, which means that the opportunity to gain benefits through these differences is excluded. The existence of differences between high technology and low technology, between production and services, disappears in such a state of the economy, when all industries can use advanced technologies and highly qualified personnel to achieve a high level of development.

Where the equality of conditions of economic functioning prevails, the differences are leveled, where the objective opportunity to obtain such advantages in the competitive struggle (due to differences) disappears, competition must cease to exist. In order to maintain the competitiveness of the market on the part of commodity producers, there is one way out - to create advantages (differences) themselves. Competitive advantages artificially created by the enterprise are competitive advantage.

The creation of competitive advantages by enterprises is the basis of non-price competition as a fundamentally new type of competition. An enterprise can outperform its competitors if it is able to create a difference for itself and subsequently maintain it. In non-price competition, productivity competition is based on innovation.

A wide and diverse set of competitive advantages for the enterprise provides a more stable position in certain market segments and among competitors.

Enterprise competitiveness, from the point of view of the totality of competitive advantages, is a product of the interaction of an enterprise with a microeconomic business environment. The competitiveness of an enterprise is created by two groups of factors: the level of economic development of the enterprise, as well as the quality of the microeconomic environment.

The assessment of the quality of the microeconomic environment characterizes the specific advantages inherent in the enterprise along with its own competitive advantages, but not created by it. Meanwhile, as the calculations of the World Economic Forum show, the factors of the business environment have the greatest influence on the dynamics of economic growth as a whole.

Author: Ilyina V.N.

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