In one of the previous blogs, we discussed the importance of incorporating Corporate Social Responsibility (CSR) in your company and mentioned that it could be a possible competitive advantage. There can be different types of competitive advantages, but to put simply, it is a way that you can distinguish yourself from your competitors in a positive way that adds additional value to your product.
Ultimately, you want to give your customers a better product and your business more profit. If you don’t have a competitive advantage, then you cannot really stand out as a business. However, if you do have a competitive advantage, you should ask yourself if your competitive advantage is sustainable. Strategists describe sustainability of a competitive advantage as having resources that are:
Valuable – your resources have a greater value (in terms of costs/benefits) than the resources of your competitors.
Rare – your resources may be valuable, but if they are in the hands of your competitors as well then they can’t contribute to your competitive advantage, so they should be scarce. Resources that can be acquired only by a small minority of companies are considered rare.
Imperfectly imitable – if your resources are easily replicable then you can’t have a competitive advantage for too long.
Non-substitutable – other resources cannot be direct substitutes for yours.
(Note your resources can include raw materials, technology, people, etc.)
If you have some of these then you probably have a temporary competitive advantage. If one or more of your resources passes all requirements then you have a sustainable competitive advantage (congratulations!) If not, then we hope that you have been given some food for thought and possibly some new considerations for your business. Here are some additional questions that you can ask yourself to see if your resources are Valuable, Rare, Imitable, and Non-substitutable.
- Has your company won an award or been recognized as the best in something? (most innovative, best employer, …)
- Do you have a special relationship with your suppliers?
- Do you have employees with unique skills and capabilities?
- Do you have brand reputation for quality, innovation, customer service?
- Does your company hold any other strengths compared to rivals?
- How many other companies own your resource?
- Can your resource be easily bought in the market by rivals?
- Can competitors easily obtain the resources or capability in the near future?
- Can other companies easily duplicate a resource?
- Can competitors easily develop a substitute resource?
- Do patents protect it?