Competitive Advantage

Competitive advantage (CA) means people

consistently pick your product over competitors,
for eg. Toyota has a CA over GM evidenced by
its increasing market share over a long period
CA occurs because of a superior quality relative
to costs or superior VALUE. Superior value
translates to competitive advantage.
The PQ curve represents the Price Quality
tradeoff and shows zones of CA, inferiority, and
the Porter strategy types.

Value Theory
Value = Benefit minus Costs
Benefit can be represented as Quality
and Costs as Price
So Value = Q P
The higher a products Value the more
attractive it is

Competitive Advantage
CA is created by superior competencies in production,
design, R&D, customer service and other functional
areas represented in the value chain.

Differentiation

Price

Inferior Zone

Superior Zone
Cost leadership

Quality