In my understanding, competitive advantage refers to anything that offers a business an

advantage over its competitors, allowing it to attract more consumers and expand its market

share. According to Porter, for a firm to create and sustain its competitive advantage, it must

consider the industry perspective, which includes understanding the five forces in the external

business environment, including new entrants, suppliers, buyers, substitutes, and competitive

rivalry (Porter, 1985). On the other hand, according to the resource-based view, a company's

competitive advantages are produced by its core competencies and resources. To maintain a

competitive advantage and perform at a high level, businesses rely on resources that are valuable,

unique, difficult to replicate, and difficult to replace (Madhani, 2010).

Competitive advantage is essential for all businesses, even small or large ones. Bringing superior

value to customers helps businesses ensure a stable customer base and increase loyalty, which

leads to long-term and sustainable success for the business. Competitive advantage also brings

trust from shareholders and stakeholders, helping the company easily raise capital and receive

support in strategic decisions. Furthermore, having a competitive advantage also attracts talented

people who are looking for a place to develop themselves and are willing to devote themself to

the company, increasing the company’s human resources competencies. One of the biggest

benefits of having a competitive advantage is that it allows the company to sustain itself in

unexpected situations such as rapid market changes or a pandemic.

For instance, Netflix has demonstrated a strong competitive advantage through two major crises

it has faced: the transition from DVD to streaming and the Covid-19 epidemic. Initially, Netflix

was famous for its DVD-by-mail rental model, creating a major challenge to traditional DVD

rental stores like Blockbuster. However, with the advancement of technology, the need for DVDs

decreased and consumers turned to online streaming. Netflix has faced a big challenge when it
comes to adapting to this new trend. They have invested heavily in streaming technology,

original content development, and international expansion, helping them retain customers and

maintain industry leadership. The second crisis that Netflix faces is losing a large number of

users during the COVID-19 epidemic. The reason comes from factors such as increased

competition from competitors such as Disney+, HBO Max, Amazon Prime Video, etc.; lack of

funds to continue producing TV shows and Netflix series, leading to loss of user interest. Netflix

has faced the COVID-19 epidemic by implementing a series of measures and strategies to

maintain and grow its position in the online entertainment industry. Thanks to its flexibility and

focus on customer needs, Netflix has continued to provide quality service and attract a large

number of users during these difficult times (Capital, 2024).

Companies can create a competitive advantage in value-producing activities by focusing on

either their primary or support categories. To be more specific, companies can choose to build a

competitive advantage through key activities such as logistics, operations, marketing, sales, etc.

(Pierce & Newstrom, 2014). Taking the example of Amazon, Amazon has built an efficient

supply chain of warehouse centers, distribution centers, and shipping operations. This helps

Amazon provide fast and reliable delivery services to customers, Amazon always puts customers

at the center of all business activities. They offer an easy-to-use website, personalized product

recommendations, a simple ordering process, and responsive and attentive customer service,

helping to create the best shopping experience for users.

A competitive advantage can increase value for a firm and its shareholders by allowing it to

outperform its competitors in specific areas. Companies that maintain a persistent competitive

advantage can remain market leaders in their industry. However, even the strongest competitive

advantage cannot remain forever since competitors will always try to duplicate or even
outperform it. Therefore, in order to maintain competitive advantage in the long term, companies

need to constantly enhance their performance and invest in development and innovation.
 References

Capital, E. (2024). Netflix Flexes Its Competitive Advantage - Reignites Growth And Profitability

While Competition Forced To Pull Back. Retrieved from Intrinsic Investing.

Madhani, P. M. (2010). Resource Based View (RBV) of Competitive Advantage: An Overview.

Pierce, J. L., & Newstrom, J. W. (2014). The Manager's Bookshelf: A Mosaic of Contemporary

Views (10th ed.). Pearson.

Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance

(10th ed.). Free Press.