Competitive Advantage And Success Go Hand Essay

1751 Words Oct 7th, 2015 null Page
For firms, competitive advantage and success go hand-in-hand. Because so many firms are judged on their profit margin, having a high competitive advantage that allows the firm to dictate prices and drive down costs is key. Thus, firms are constantly seeking out how they can increase their advantage in hopes that it will result in increased profits. This push to have a high competitive advantage leads firms to examine five key elements that are used in determining a firm’s advantage: established rivals, threats from new entrants, the power of buyers, the power of suppliers, and the availability of substitutes. Every business decision by firms take these five elements into consideration and how they will affect a company’s bottom line. This paper analyzes how each element contributes to competitive advantage and the culmination of these elements that would lead to a high competitive advantage and investigates the role of competitive advantage in international trade.
Established rivals are the most well-known element of competitive advantage. Because these firms are already directly competing with one another, they are the driving one another to become more competitive. As one firm might lower prices, other firms would need to follow suit. If a firm offers a higher quality product, the rest of the industry would need to raise their level of quality to that of the first firm. In many ways, competitive advantage relies much on staying ahead of your established rivals and finding…

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