DANG QUOC HUY’s

INDIVIDUAL
ASSIGNMENT

Semester: 3
Year: 2023 - 2024
Class: EBBA 14.1
Course: Strategy Management
 1. What is sustainable competitive advantage and how to
implement it ?
Every firm or business aims to earn above-average returns over the longest
possible period. This goal necessitates sustaining a competitive edge over
competitors, synonymous with satisfying customers better than competitors can.
Sustainable competitive advantages (SCA) play a crucial role in achieving this,
representing lasting competitive advantages that originate from a business's
capabilities. Firms need competitive advantages to provide reasons for customers
to choose their products or services. If a product is similar to others, customers
lack a reason to choose it, leading to an inability to earn above-average returns.

Sustainability is vital for firms to continue earning above-average returns for an

extended period. SCAs develop over time through an organizational process of
accumulating and learning how to deploy different resources and capabilities. The
criteria for a capability to be an SCA include being valuable, rare, costly to imitate,
and non-substitutable.

Valuable: For a capability to be a sustainable competitive advantage, it must be

valuable not just for the company but also for customers. It should help the firm
exploit opportunities and neutralize threats. For example, one of Vinamilk's core
competencies is its diverse portfolio. While the core competency is valuable for the
firm in utilizing resources, it might not be directly valuable for customers.
Customers make purchasing decisions based on factors such as quality, packaging,
and price, not merely because a brand offers a variety of products.

Rare: To qualify as an SCA, a capability must be rare or unique. When customers

choose between products, the uniqueness of a product becomes a deciding factor.
Without differentiation, customers lack reasons to choose one product over
another.

Costly to imitate: Sustainable competitive advantages must be challenging for

competitors to imitate. The costliness of imitation can result from unique historical
conditions, ambiguous capabilities, and social complexity.

Non-substitutable: Competitive advantages must be unique and irreplaceable. They

should not be easily substituted by alternatives. The main purpose of competitive
advantage is to be different from other competitors, and it can create a level of
satisfaction for customer. When a competitive advantage can be replaced by other,
that mean the substitute create the same level of satisfaction for customer. The
product is not different from others so that the customer will have not the reasons
to buy it.
2. Why is it important?
The significance of a sustainable competitive advantage (SCA) for a firm in
business lies in its ability to differentiate the company, create value for customers,
and establish enduring success in the marketplace (The Impact of Competitive
Advantage – A Perspective, 2023). The following detailed explanations elaborate
on the importance of SCA:

Firstly, SCA positions a firm as a market leader, fostering differentiation within its
industry. A robust SCA distinguishes the firm from competitors, leading to
leadership recognition, customer loyalty, positive brand perception, and the ability
to command premium prices for its products or services.

Additionally, SCA empowers a firm to consistently outperform competitors in

terms of revenue, market share, customer satisfaction, and overall financial
performance. This sustained high performance contributes to increased
profitability, greater resilience during economic downturns, and heightened
investor confidence.

Moreover, SCA serves as a foundation for sustainable growth and long-term

success. By continually cultivating and preserving its competitive edge, the firm
can attract and retain talent, venture into new markets, and remain relevant amid
dynamic and competitive business landscapes.

Lastly, SCA provides a firm with competitive resilience and risk mitigation. Acting
as a buffer against competitive threats and market disruptions, a strong SCA
enables the firm to adapt swiftly and maintain its lead when competitors introduce
new products or services. It also enhances the firm's ability to navigate economic
downturns due to its superior performance and loyal customer base.

In conclusion, a sustainable competitive advantage serves as a potent catalyst for a

firm's success. It is not merely a supplementary asset but an essential element for
long-term viability and prosperity in today's competitive business environment. By
prioritizing the development and maintenance of SCA, firms can attain superior
performance, attain market leadership, and secure their position in the
marketplace's future.