By: Ciera Cheffen
During a past class session we talked about the five generic competitive strategies and economies of scale. In which I found an article on Forbes.com discussing why successful companies focus on competitive advantage and not just making a profit. In the article the writer talks about, "A company's profits are the result of its competitive advantages. Therefore, successful investment managers focus on whether a company's competitive advantages will enable it to defend and grow profits."
During a past class session we talked about the five generic competitive strategies and economies of scale. In which I found an article on Forbes.com discussing why successful companies focus on competitive advantage and not just making a profit. In the article the writer talks about, "A company's profits are the result of its competitive advantages. Therefore, successful investment managers focus on whether a company's competitive advantages will enable it to defend and grow profits."
An example of a company that has come into the industry and took over is Uber. Uber came into play six years ago and has already dominated the industry and over-powered the yellow taxicab company. One competitive advantage they have over the taxicab is everything is run on an app. With having an app it gives plenty people of access to it because of how big technology has become. Mostly everyone has a smartphone where they link up their accounts to their phones such as social media, debit cards, and email to be able to easy access to communicate throughout the day. Another strategy they have used is the low-cost provider strategy that allows a company to sell at a lower price than your competitors to attract customers. This is known as a price advantage. Companies using this strategy will typically earn low margins but achieve high sales volumes. Low-cost providers aim their products at the broad market, making them appeal to as many consumers as possible to achieve high sales volume.
When focusing on competitive advantage as a company for every dollar you make a percentage of that should be reinvested back into your company for marketing, developing new products, or improving existing products. It's about having your brand stand out compare to your competitor. Once your brand and services can out-stand competitors you can expand on that competitive advantage.
Why Successful Investors Focus On Competitive Advantages, Not Just Profits
Contrary to popular opinion, a company's profits are not the result of the products and services it sells. And when evaluating whether to invest, successful investors don't only focus on a company's profits. I know what you're thinking: "He has it backward - corporate profits do come from selling products and services, and successful investors only focus on a company's profits."
Ciera
ReplyDeleteIt is very interesting to see how Uber has evolved and been able to sustain harships such as the #deleteuber campaign. Im assuming this is because of their competitive advantage.
I would have to agree with you. Even though they have came out to support Trump they sales have declined but I would still say they are leading in their industry.
DeleteIt is unfortunate for the taxi drivers, but technology is taking over and lyft and uber created a way to make getting a ride easier and more convenient. So, maybe taxi drivers should switch over to one of these companies.
ReplyDeleteI agree that Uber has become so successful and profitable due to its dependability and low-cost. I think it'll be interesting to see how they'll incorporate autonomous cars in the future.
ReplyDeleteAlthough it is very unfortunate that taxi drivers are going out of jobs, I do appreciate the convenience of Uber and Lyft. We are in an era where technology is extremely important and vital to everyone's day to day activities. Having apps such as Uber and Lyft are just an extension of this fact. Taxi drivers also have the option to either stick with driving taxis or to join the technological wave and become Uber and Lyft drivers.
ReplyDeleteInteresting topic. Uber and lyft have dominated the car service industry. They were able to do this because of technology and cheaper prices. That's there competitive advantage. Seeing how successful Uber and Lyft are today shows they know what there doin,
ReplyDeleteGreat topic and I agree completely with Uber having an advantage due to their technology base. I actually have met taxi drivers that say that they drive for companies like uber and lyft when they are off.
ReplyDeleteBeing an aspiring entrepreneur the idea of competitive advantage is one that I would like to incorporate in my business plan. I love the idea that from every dollar you make a percentage should be reinvested into your company for marketing, developing new products or enhancing products. I will definitely be thinking of ways to use competitive advantage in my businesses. Thank you for your blog post!
ReplyDelete