Competitive Advantage

Secrets Of Successful Companies

Some companies are just better than others. It could be name recognition, innovation, market share or any number of other attributes that makes a good company stand out from others.

As Chinese proverb says: ”be not afraid of growing slowly, be afraid of standing still”. Of course everyone understands it in a different way, but in particular these words can be attributed to enterprises or companies because the key thing for a long life of every company is development.

There are many examples of successful companies. All of them follow the same key rules to get right. A company should change, extend all the time and do well even at a difficult time for the industry. It needs to be highly competitive, to raise profits share price, to increase turnover and market share.

Every company should all the time increase a range of items it produces, finance a number of new projects, open new subsidiaries and of course take care of their dedicated employees, because they are the most valuable asset of the company.

There are many reasons for being successful in business. Firstly, it’s a very strong brand name, which should build good reputation for a company. Secondly, it’s necessary to develop new models and to invest a lot of money in these models, because it helps a company to compete with other companies or another industry.

It’s rather essential to give the products a very up-to-date look, to focus on styling and on the quality of the products. Then every company should plan to expand abroad, to create new markets. Through 2 routes, subsidiaries and distributors, a company can make a strong dealer network. The dealers should be people at a retailing level who are knowledgeable and enthusiastic about the product and who are able to sell it in the face of strong competition. So, it’s obvious that it’s important to combine a lot of elements in order to be successful in business and to make profits in the long term.

So, what is it about one company that makes it a good company, and does that description equate to a good stock to invest in? The answer depends on whether you ask an accountant, an economist, a marketer or a human resources expert, but by pulling all of those disciplines together, you generally can define a good company by these three characteristics:

1) Competitive advantage

2) Above-average management

3) Market leadership

Competitive Advantage

Michael Porter pioneered the concept of competitive advantage and broke it down into two forms: differentiation advantage and cost advantage. Differentiation advantage is when a company provides a superior service or product for the same price charged by the market. Cost advantage is when a company provides the same service or product as the market, but at a lower price.

Porter collectively refers to these as "positional advantages" because they define the firm's position as having the leading service or product in its specific industry. He also states that these advantages cannot be sustained for any length of time because the promise of economic rents invites competition.

Дата добавления: 2015-11-14