Competitive advantage can be achieved through either a lower cost or a differentiation strategy. On the one hand, a lower cost strategy is where a firm is able to operate more efficiently than its competitors and produce more competitive quality of goods and services to match market prices. Thus, the lower cost of production can be converted into superior returns.
Therefore, a firm does not need to be the best player in the industry in order to enjoy a competitive advantage; It just needs to know how to create economic value for itself. However, in the context of SMEs, entrepreneurship and luck are tipped to be crucial for firms to gain competitive advantage, as both these factors have been identified as the key reasons for the success of these firms.
Competitive advantage can be achieved through either a lower cost or a differentiation strategy. On the one hand, a lower cost strategy is where a firm is able to operate more efficiently than its competitors and produce more competitive quality of goods and services to match market prices. Thus, the lower cost of production can be converted into superior returns.
Therefore, a firm does not need to be the best player in the industry in order to enjoy a competitive advantage; It just needs to know how to create economic value for itself. However, in the context of SMEs, entrepreneurship and luck are tipped to be crucial for firms to gain competitive advantage, as both these factors have been identified as the key reasons for the success of these firms.