In an age where industrialization is at its peak and the market is open and fair for companies, competitive advantage is what keeps most manufacturers and service providers in business. A business must posses something that appeals to the consumers in order to enjoy their patronage. This could be in the form of price advantage, brand advantage, after sale advantage or customer relations.
In Professor Hao Ma’s article titled, “Leaders Beware: Some Sure Ways to Lose Your Competitive Advantage”, he noted that although several literatures have been written on how to create and gain competitive advantage, little is being said about ways of losing competitive advantage. Drawing examples from several firms that lost their competitive advantage, Professor Hao Ma pointed out that although a firm might have held competitive advantage in a business for a long time, it can lose this advantage if it gives room to laxity or negative attitude.
Using Kodak as an example, Professor Hao Ma noted that lose of competitive advantage can be triggered by two factors – the internal and external factors. According to him, “ignorance, negligence, arrogance, self-aggrandizement and overconfidence account for some of the internal factors while environmental shift, competitive substitution, imitation, sabotage and bad luck are external triggers” (Ma, 2003).
In 2007, David and I were involved in a pizza-delivery business. Business was booming and we had a turnover of about $20, 000 a year. It was like that for about 10 months until we hired Emily, a call receptionist that was rude and usually forgets to relay placed orders to the delivery unit. Our customers got angry and before we knew it, we had to shutdown the business down.
In a similar article titled, “Gaining and Losing Competitive Advantage”, Christian Bellak noted that creating the right policies gives companies competitive advantage, not only in the present but also the future. Policies such as being in the right location, employing the right hands and making a viable study of the market gives companies competitive advantage while the lack of these could make a company lose its advantage in the market (Bellak, 2003) .
Ma, H. (2003). Leaders Beware: Some Sure Ways to Lose Your Competitive Advantage. Peking
University China Center for Economic Research. Beijing:
Bellak, C. (2003). Gaining And Losing Competitive Advantage. Vienna University of Economics
and Business Administration. Retrieved from http://www.wu-wien.ac.at/inst/vw1/gee/papers/geewp34.pdf. Assessed on May 1, 2010.