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Companies seek to outperform each other in the context of commercial competitiveness, and this is an obvious and necessary matter for any company in the market, and from this endeavour, each company tries to exploit any gap or loophole that may arise with competitors and work on it more to correct it or find an alternative solution to attract and attract its customers.

But with the emergence of the concept of comparative advantage in the thirties of the last century as a theory to explain commercial competition and then its development to become more than just a theory decades later, all companies, including start-up companies, seek to distinguish themselves over their competitors by creating new added value or improving the existing and paying attention to innovations and investment in the field of scientific research Perhaps it will reach what we call competitive advantage today. What is the competitive advantage, what are the most prominent characteristics of the competitive advantage, and what are the strategies through which a competitive advantage can be achieved?

What is the competitive advantage?

It is a feature that allows the company to outperform its competitors, and it is either a new innovation or a discovery of new ways in manufacturing, marketing or development, and in everything that may lead to creating better added value than competitors (high quality product, modern technology, low price, fast service...) Competitive advantage was associated as a concept at first by David Ricardo, then as an economic term by Michael Chamberlin in 1939, and then it developed from the theoretical circle to the practical reality with the contributions of Michael Porter and Philip Kotler.

Competitive Advantage Characteristics

There is a set of determinants of competitive advantage that will indicate if it is really an advantage or just an idea or tradition, etc. It is as follows:

First: embodied

If the competitive advantage is not applicable on the ground and full embodiment on the field, then there is no benefit from it and it should remain just future sayings and designs at the most. A company’s arrival to a new innovation will have a future and not today, because of the lack of infrastructure, for example, or the market is not ready and his clients. These things do not make it a competitive advantage, but rather it remains a deferred competitive advantage, and it may never be! Therefore, there is a difference between anticipating and preparing for the future within a vision and time frame, and obtaining a competitive advantage. As an example of embodied competitive advantages:

• Providing raw materials in very large quantities.
• Hiring highly qualified staff and workers.
• Access to new technologies, innovation or import.
• Expansion into a very convenient geographic range.

Second, effective and decisive

If the competitive advantage is not better than the competitors in the part it covers, it will be incomplete and will not achieve much for the company. The description of “competitiveness” clearly means creating a kind of competition and keeping pace with other companies active in the same field of the company.

Third: exclusive and fortified

Of course it is immoral to steal other people's ideas or imitate them literally! In leaving no room for the company to show and highlight its personality and special touch, we do not mean here inspiration and taking advantage of competitors’ loopholes and developing them after studying competitors. Information technology, and the competitive advantage must not be easy to imitate and imitate by competitors, otherwise it will lose its immunity and secret.

Fourth, it provides real added value

This part is for targeted customers, who are the center of competition and the mainstay of trade. Without creating a real added value that makes a difference to customers, competitive advantage does not make sense even if the previous conditions and characteristics are met! It is unreasonable for a company to gain a competitive advantage over its competitors and dominate the market through it without achieving the slightest satisfaction of the needs and desires of customers.

This added value may be entirely new or existing and developed, such as:

• Reducing prices with the quality of services without falling into a loss, but rather achieving more profit, whether financial or marketing.

• Providing new additional services that are not available to competitors, such as free delivery services.

Fifth: Life Cycle and Continuity

Every competitive advantage has a life cycle that has a beginning, an upsurge, then a decline, and an end. It is rare to find a long-lived competitive advantage nowadays, due to the availability of most companies on advanced technologies and the speed of developments in all fields, and the emergence of scientific studies and academic papers in an accelerated and periodic manner, which may make Any competitive advantage today is liable to disappear tomorrow! Only based on recommendations from a recent scientific study that advises this or that or because companies imitate each other, as happens with Chinese companies that no longer hesitate to imitate and steal the competitive advantages of American and European companies in broad daylight!

Accordingly, the most important characteristics of the competitive advantage is that it has a life cycle like the rest of the products and vital processes within the company, and the difference between companies emerges thanks to the continuity of a competitive advantage for a longer time than the rest, and not only short-term continuity. We also add flexibility, renewableability, and alignment with the company's public perceptions and goals, so that they are part of the company's overall strategy.

The importance of competitive advantage

Reaching the appropriate competitive advantage is one of the most effective business strategies, just like marketing products, studying the market and forecasting future sales. Therefore, the goal of using competitive advantage can be summarized as follows:

• Increased sales and consequently an increase in profits.
• Giving a dynamic movement to the internal operations of the company, such as production and marketing.
• A step ahead of competitors, especially if the company can maintain the continuity of its competitive advantage and protect it from imitation.
• Raising the value of the company and its shares among investors, gaining their trust, and increasing the value of the company in the media and among specialists.

• Increase customer loyalty to the brand.

Conditions for the effectiveness of competitive advantage

Before acquiring it, it is necessary to take care to take some steps and know some of the details that always make the difference in this regard, most notably:

1. Determine the added value

Companies, especially startups, should be more clear with themselves about the advantages and benefits that their product or services will provide to customers, leaving no room for confusion between competitive advantage and the normal nature of the product.

2. Market Study

Knowing the volume of demand for the product you want to upgrade by gaining a competitive advantage is one of the most important things to focus on when conducting market research, in addition to observing the volume of supply in the market from competitors, while identifying potential suppliers and importers to ensure that the competition mark is not trapped in the office drawers without a presence in the market real.

3. Study competitors

Determining the strengths of their competitive advantages and weaknesses and trying to exploit them when building a competitive advantage, and studying competitors is not limited to this only, but it is preferable to be comprehensive of all technical and technical aspects, aspects of pricing and others.

The difference between competitiveness and competitive advantage

Despite the verbal similarity between them, the meaning is slightly different. As we saw above, anything you master more than your competitors and excel in is a competitive advantage, and this advantage may last for months or years depending on the surrounding circumstances, the reaction of competitors, market stability and other factors. As for competitiveness, it is a broader concept than competitive advantage in terms of time and technology. Competitiveness is not often time-limited or temporary, but rather open and similar to a company or institution.

Likewise, from a technical point of view, the institution’s ability to plan, innovate and reduce prices while increasing profits and other vital internal functions, are all indicators of its ability to compete. In short, competitive advantage is the product of the high competitiveness of the business entity.

to remember! Competitiveness will allow the company to constantly create competitive advantages and its absence, that is, the ability to compete will lead to the absence of any competitive advantage.

How to use competitive advantage?

It is agreed that the most important sources of competitive advantage acquisition are: (cost leadership, differentiation or quality, focus on one of them) and we will detail in each of them and add to them another set of types of competitive advantage:

First: Cost Leadership

If the company can provide raw materials in large quantities, for example, from the right suppliers, it will be able to expand its production volume, and thus the cost of production will decrease, which means a reduction in the selling price of the product or control it in a way that other competitors do not allow it to do or simulate it. This will mean greater sales and profits, an irresistible competitive advantage, and in order to achieve a lower cost the company or organization is supposed to control and monitor these elements well:

• The size

It means acquiring more and more efficient means of production, while keeping pace with technology. Volume also means entering new markets and launching diverse assortments of products and services, and everything measured by size in the organization must be expanded and increased.

• Merge likeness

That is, merging similar sectors and activities within the company, to achieve optimal utilization of the resources of each sector combined, and to reduce production and management costs.

• Positioning

It means the position of the company in relation to the market, its dealings with the most influential customers, and its access to large suppliers to supply it with huge raw materials at very low prices. Add to this the position of the company in relation to its employees and workers and the size of their wages.

Although cost leadership is effective, it is not suitable for start-ups, and is not available in all businesses. Take an example of a cost leadership strategy at McDonald's, which sells its meals at lower prices thanks to its availability of raw materials in abundance and at a lower price, allowing it to reach mass production and control pricing in the market.

The same goes for the Walmart retail chain that deals directly with major suppliers, and imports merchandise by the tons!

Second: Differentiation

It is also called quality, and it requires that the company distinguish its products or services from the rest of the competitors, by upgrading the quality to the highest possible degree, so that the difference between the added value it provides and what the competitors offer. Most important of all, the customer can differentiate efficiently to realize that our company's products are worth their high price.

Observing quality and excellence can only be done if the company possesses factors that contribute to the uniqueness of the product or service, such as adding after-sales services such as maintenance and follow-up or free consultations to its list of services. To achieve excellence, there are two very important elements:

• Continuous training

Employees must keep up to date with the changes taking place in the labor market, by learning how to control the latest technologies and stay in continuous learning about the best methods of management, production, marketing, maintenance, and everything related to work.

• Performance Monitor

As a feedback on the company's actions, recent organization performance monitoring will tell us if something needs to be modified such as product development or some removal and replacement, to avoid falling into the trap of randomness and failure later.

This strategy is very suitable for startups because it is based on the principle of innovation and improving the user experience. Examples of a strategy of quality and differentiation are luxury perfume stores such as Channel, original clothing companies such as Adidas and Nike, expensive car manufacturers such as Rolls Royce and others that take product or service quality as their motto and focus less on cost of production, and often have regular customers. Although they are few, their loyalty to these brands is very large.

Third: Focus

The focus strategy means that the company focuses on a narrow customer segment, and focus on making a product that specifically reaches this segment. The strategy has two other aspects: (focusing on cost reduction) with narrow targeting, and the second tier: (focusing on differentiation) i.e. product differentiation and quality With narrow targeting, too.

Fourth: time

It consists of two parts, one related to the company itself, and the other to customers and the quality of products and services:

• Scheduling

It means waiting for the right time to enter a market or to target a larger segment of customers and so on, and this waiting or making a decision to enter or expand is by scheduling and organizing the activities of the institution in time, because any haste may lead to dire consequences.

• Responsiveness

The faster the company responds to the requests of its customers, the greater their satisfaction rate and the higher their purchase decisions; Accordingly, the time factor can be considered the most important factor in obtaining a successful and continuous competitive advantage. As an example of taking into account this factor, we find a giant company such as Amazon that made good use of the advantage of time, which made it unique among its peers, as the delivery after ordering the product does not exceed two days, and if the stores are not in the same country, it does not exceed a week, and this is a record number compared to other companies that take A month or more to deliver their products! This is, of course, due to the strong and advanced infrastructure owned by Amazon and its various contracts around the world.

Fifthly: keeping up

It is also called flexibility, and it is one of the defensive strategies and is concerned with automating the business if possible and keeping the company fully informed of the technological and environmental changes and developments that are taking place around it, and aware of changing working and market conditions and the latest activities of competitors ... and so on. This constant updating gives the company a competitive advantage, which is “flexibility,” which in turn allows it to keep pace with the aspirations of its customers and market conditions in parallel.

Sixth: Creativity

This element is beyond definition and explanation. Creativity is the establishment's embodiment of its innovations on the ground for tangible products or high-quality services, taking into account the element of innovation and deviation from the ordinary within the framework of reason and achieving greater added value. Creativity is not only related to production and innovation, but to the development of appropriate marketing strategies, because the role of e-marketing in achieving competitive advantage is very large.

Seventh: Making alliances

Any formal or informal partnerships, and it may be between two companies from two different fields that allied to achieve integration between their functions and their performance in the market. It is called a functional alliance as a factory alliance with a delivery or shipping company, or between the company and a customer, and it is called a commercial alliance, and this cooperation is through signing an official or customary contract that gives the latter more privileges such as discounts. It may be between the company and research centers such as universities and educational institutes to work on exchanging experiences and conducting scientific research to develop a product or another new industry or to benefit from consultations and guidance. This is called a dynamic alliance, for example contracting with business incubators. In fact, there are many types of alliances in the world of business and finance.

What is taken for this strategy is that it may be temporary, especially if it is not documented by binding formal contracts, yet it is very suitable for startups in that it provides great support to them, especially in their infancy.

Finally

From the above, it becomes clear to us the importance of the competitive advantage and the preference of companies that are trying to access the means of using the competitive advantage constantly, because it has become clear today that a company that is not keen on providing a competitive advantage for itself will not outlive the market or at least it will remain at very modest levels and will not progress quickly, at a time when competition and struggle to attract customers and expand markets intensified.

The role of information systems in achieving competitive advantage is also not hidden, given that business today is almost completely digital, and the answer to the question remains: How is competitive advantage used to achieve real and tangible progress? It is the separation between companies that seek to embody their competitive advantages on the ground, and those that keep them ink on paper indefinitely!