Financial Resources and Competitive Edge

Competitive advantage is very crucial for companies, regardless of the industry that they are a part of. It is, essentially the key to attaining success and also improving its performance. However, in recent some years, there have been various changes in the aspects of competitive advantages. One of them is the emergence of sustainable competitive advantage. It entails that a company should develop and maintain its assets, attributes and abilities to provide support for the long run. This means that the business operations should be managed and the resources should be utilised in order to support firms’ long term existence in the market.

There are a number of sources from which companies can acquire a sustainable competitive advantage. One of the main sources is human capital. For every company, its manpower is the biggest point of advantage. If the company is able to properly manage its employees, keeping them satisfied and motivated, then the firm can gain a superior position in the market. It can also help the firm in performing better. This way the company can gain an edge over its rivals, along with fulfilling desires and demands of the customers to the greatest possible extent. Apart from this, capital, i.e. the financial abilities of the company also have a crucial role to play in acquiring a sustainable competitive advantage. In order to obtain such an edge, the company should have more than an adequate amount of capital. For instance, initially Google did not have too much financial capabilities, but today it has enough financial resources to strategise and develop its products for the future.

However, acquiring a competitive advantage is not just dependent on resources available to the firm. These are also dependent on other factors, such as customer demands, trends and preferences. On this basis, it can be said that a company, in order to gain sustainable competitive advantage needs to fulfil the demands of the customers and also identify as well as understand customer trends by predicting them. This can be extremely useful for the firm. Similarly, sustainable competitive advantage can also be based on a variety of other factors like demand and supply, quality of products and/or services, level and intensity of competition.

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On the basis of the above discussion, it is clear that sustainable competitive advantage is a very important concept for modern day companies. However, it is dependent, not only onthe resources and capabilities of the firm but also on a host of other factors which are out of its control. Therefore, it can be said that sustainable competitive advantage is based on both internal and external factors of the company and its industry.