2.1 Competitive advantage, also known as unique selling proposition, is that ‘something’ or ‘edge’ an organisation offers to customers that competing firms do not have, therefore adding more value to the customers’ lives (Botha et al. 2007). Thus, a competitive advantage enables an organisation to create superior value for its customers and superior profit for itself by generating greater sales or margins and/or retaining more customers than its competitors. Organisations can gain competitive advantage by adopting one of Porter’s five generic strategies i.e. cost leadership, differentiation, focused low cost, focused differentiation and integrated cost leadership/differentiation (Louw & Venter, 2013). Before deciding on a strategy, organisations
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Sustainable competitive advantage requires value-creating products, services and processes that are unique, rare and that is not easily duplicated or surpassed by their competitors (Louw & Venter, 2013). Therefore, an organisation’s competitive advantage must be based on features or dimensions that are important to the customer i.e. durability or quality (Botha et al. 2007). The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize and/or outsmart the advantage (Kasimoglu, 2004). Sustained competitive advantage leads to above-average returns which in return, leads to strategic success in the long run (Louw & Venter, 2013). The Coca-Cola Company, the world’s leading soft drink maker, operates in more than 200 countries and sells 400 brands of non-alcoholic beverages. Coca-Cola is possibly the most valuable brand in the world and therefore acts as an excellent example of sustainable competitive advantage. Coca-Cola currently holds a 32.7% market share of the soda production industry, 21.6% market share of the bottled water production industry and 26.8% market share of the juice production industry. Their large market share allows the company to earn above average returns and enjoy sustained competitive advantage within each industry. The large market share is attributed to strong brand loyalty amongst consumers, efficiencies developed within the production process, and strong product placement (Coca-Cola Company,
Sustainable competitive advantage requires value-creating products, services and processes that are unique, rare and that is not easily duplicated or surpassed by their competitors (Louw & Venter, 2013). Therefore, an organisation’s competitive advantage must be based on features or dimensions that are important to the customer i.e. durability or quality (Botha et al. 2007). The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize and/or outsmart the advantage (Kasimoglu, 2004). Sustained competitive advantage leads to above-average returns which in return, leads to strategic success in the long run (Louw & Venter, 2013). The Coca-Cola Company, the world’s leading soft drink maker, operates in more than 200 countries and sells 400 brands of non-alcoholic beverages. Coca-Cola is possibly the most valuable brand in the world and therefore acts as an excellent example of sustainable competitive advantage. Coca-Cola currently holds a 32.7% market share of the soda production industry, 21.6% market share of the bottled water production industry and 26.8% market share of the juice production industry. Their large market share allows the company to earn above average returns and enjoy sustained competitive advantage within each industry. The large market share is attributed to strong brand loyalty amongst consumers, efficiencies developed within the production process, and strong product placement (Coca-Cola Company,