A sustainable competitive advantage is a technique of identifying a lucrative opportunity that can give a benefit that the competitors cannot duplicate for a very long time. This advantage could be differentiation, a novel company model, entry restrictions, control over key resources, etc., anything that prevents competition for an extended period. For instance, Walmart’s “Opportunity Loop” focuses on cutting costs rather than simply harvesting the greater margins as immediate profits, as most businesses do. The savings are then used to increase future pricing and drive more sales to increase profits. Walmart was able to offer “every day cheap prices” due to this tactic and several additional ones. The other example can be SouthWest Airlines’ business model of flying short hauls between small city airports which gave it an advantage that competition could not match for years and Dell’s strategy of mass customization.
Nowadays, it’s significantly difficult to maintain a sustainable competitive advantage because things change so quickly, and once your rivals figure out how to imitate your competitive advantage, it’s no longer an advantage! To succeed in today’s market, businesses must seize opportunities quickly, take immediate action to capitalize on them, and then move on before they run out of steam. This constant generation of advantages gives the company a “transient competitive advantages.”
Kodak, once a leader in the photography sector, is an illustration of this situation. In 1973, the Hunt brothers, oil and gas billionaires, decided to increase their stock of silver, and prices of this commodity shot through the roof. Kodak was one of the major consumers of silver and tried to break away from this stranglehold by inventing the digital camera. This was a great example of a transient competitive strategy. However, what they didn’t do was capitalize on this advantage. They remained dependent on a film-based model for far too long. Around the time of the Kodak incident, there was another business in the photographic sector called Fuji. The Hunt brothers’ influence over the silver had an impact on Fuji as well, the other player. Fuji, as opposed to Kodak, understood that relying on chemicals whose costs they couldn’t control would always leave their company vulnerable. Fuji began looking into ways to make photography less reliant on chemistry. Fuji is currently a market leader in the photography sector.
There are three stages in the lifespan of a transient competitive advantage: In the first phase, an opportunity is identified, and the resources needed to take advantage of it are organized as part of the launch procedure for a fleeting competitive advantage. The idea is scaled up in the second step, known as ramp up. In the third stage of the exploit, you may be able to increase your revenue and market share while forcing rivals to respond. If your competitors do respond to your product change in kind, your advantage is weakened by the rivalry you sparked. So, to keep the distinctiveness, you will need to reconfigure your advantage.
To thrive in the fiercely competitive and barrier-free market of today, businesses should take transient competitive advantages into account. They could consider creating ad hoc business plans that consider the relevant business and market factors at the time. As soon as the key variables change, these strategies should be updated.
LIFE @ IMI 
Speak your mind