Competitive advantage is an edge that a firm has over its competitors, allowing it to generate greater sales or margins and retains more customers than its competition. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage. Competitive advantage has two main types that’s to say comparative or cost advantage and differential advantage.
Comparative advantage is a firm’s absility to produce a good or service at a lower cost than its competition, which gives the firm the ability to sell its goods or services at a lower price than its competition to generate a larger margin on sales.
Differential advantage when a firm’s products or services differ from its competitors and seen as better than its competitors products by customers.
Most entrepreneurs and business owners know that one key to surviving in business is to have a sustainable competitive advantage and below are some of the different sources of competitive advantage:
Strong research and development capabilities. A business can gain competitive advantage in its industry if it has strong research and development capabilities. It reflects the company’s product development process. Companies with strong research capabilities often lead the market with innovation. For instance, in the technology industry Apple and Sony are the two companies that have held their leadership position using innovation as a competitive advantage.
Access to intellectual properties. The holding of an intellectual right; which can exist in the form of trademarks, trade names, copyrights and patents. The holding of intellectual properties is a strong source of sustained competitive advantage and General Electric company has stood the test of time because of the several patents held.
Exclusive re-selling or distribution rights. Holding exclusive distribution is another source of competitive advantage. When a company holds exclusive rights to a product within a given territory: that product can only be sourced from the distributor or holder of such rights. For example the Coscharis Group has become one of the leading automobile retailers in Nigeria and West Africa at large because of its possession of exclusive distributorship of BMW brand throughout West Africa.
The ownership of capital equipment. This is mainly exploited by companies operating in industries where heavy machinery is needed. Some industries where ownership of capital equipment is a competitive advantage includes publishing, manufacturing, oil exploration, construction and mining. For instance Julius Berger has become a leading company in the construction industry through ownership of capital equipment.
Superior product of customer support. Any company that has the ability to quickly respond to customers need and produce subsequent support will have a competitive advantage over competitors. Take for example IKEA has become a market leader in the furniture industry because of its ability to provide superior product at an affordable rate backed by a strong customer support system.
Low cost or high volume production. If a business has the capacity to produce in high volume then it can gain a competitive advantage by reducing its profit margin and recoup it through high volume sales and turnover. For example Dangote Group of companies became one of the leading conglomerates in Africa because of its ability to produce goods on high volume and ensure a uniform price throughout Nigeria.
Economic factors. Economic factors of a region within a speculated time frame is also a competitive advantage. A manufacturing company operating from China or India will have competitive advantage over a company manufacturing in the United States because the economic system in China is more favorable with respect to start up overhead and labor cost.
Superior database management and data processing capabilities. A company that demonstrates the capacity to process data speedily will have a competitive advantage over other firms with lower processing capacity. This usually plays itself out in the banking, telecommunication and service industry. For example GT bank, AT&T, Google, Facebook have become market leaders in their various niches because of the superior database processing capabilities they possess.
Access to working capital. This is one of the strongest sustainable competitive advantage a business can have over its competitors. Having access to working capital is the difference between a billion dollar company and a million dollar company or a small business and a big business. Take for instance Oracle has acquired 57 companies in a space of five years and Reliance industries investing a billion dollars in a single swoop to open a chain of retail stores.
Barriers to entry. Some businesses have gained competitive advantage because the entry in their industry has been limited by surrounding circumstances. A vivid example of industry where barriers to entry create competitive advantage is the oil exploration and mining sector. Monopoly is also a competitive advantage and can be gained by having strong ties with the government. Barriers to entry due to government restrictions and regulations have been the source of competitive advantage for companies like Telmex and Chevron. (a) Social enterprises are organizations that are led by an economic, social, cultural, or environmental mission consistent with a public or community benefit. The pursuit of this goal is through trading; and the channeling of most profits or surplus towards the mission. The value generated by social enterprises will typically be measured in terms of the achievement of their social, cultural or environmental mission, as well as their financial sustainability.
There are different motivations for setting up a social enterprise that include; Employment Service innovation and Income generation. Some of the types of social enterprises include;
Social firms: are created for the primary purpose of providing jobs and training opportunities for disabled people. For instance Concept Conference Centre.
Development trusts: focus on the environmental, economic and social regeneration of a specific area or community. For example All Saints Action Network.
Community Development Finance Initiatives (CDFIs): provide loans and support to people and businesses that find it difficult to access mainstream finance. Take Aston Reinvestment Trust.
Credit unions: financial co-operatives providing savings and lending services to their members. For instance 6 Towns Credit Union.
Co-operatives: structured and run in accordance with the seven international co-operative principle. There are many types of co-operative business (worker, consumer, marketing, food agricultural, secondary) e.g. Think Venue
Leisure Trusts: organizations set up to independently run local authority leisure services. Various bodies have been set up

REFERENCES www.investopedia.com www.cwcda.co.uk