Competitive advantage refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins compared to its market rivals.
Types of Competitive Advantage
Competitive advantages can be broken down into comparative advantages and differential advantages.
Comparative advantage is a company’s ability to produce something more efficiently than a rival, which leads to greater profit margins.
A differential advantage is when a company’s products are seen as both unique and higher quality, relative to those of compititors