What is meant by the term competitive advantage?

The term competitive advantage refers to the factors that allow a company to produce goods or services better or more cheaply than its rivals. It encompasses the reasons why a company stands out in its market and how it is positioned relative to competitors. Understanding a company’s unique value proposition and how it differentiates itself is essential for strategic planning and operational success.

By focusing on what makes a company unique and how it is perceived in the market, businesses can leverage their advantages to attract customers, retain market share, and effectively compete. This may include elements such as brand identity, customer loyalty, operational efficiency, and market positioning.

While unique product features, customer service quality, and the number of competitors can all play a role in defining a company's market position and competitiveness, they do not encapsulate the broader essence of competitive advantage in the same way that a focus on uniqueness and market positioning does.