competitive advantage

(noun)

something that places a company or a person above the competition

Examples of competitive advantage in the following topics:

  • Announcements, News, and Returns

    • Fundamental analysis involves analyzing a company's financial statements and health, its management and competitive advantages, and its competitors and markets .
    • If Nvidia, a company who produces micro-processors for smart phones, announces higher than expected profits on reduced production costs, it might not only cause their stock to spike, but it could lead to a decrease in the price of the stock of their primary competition, Intel.

  • Impact of Diversification on Risk and Return: Unsystematic Risk

    • The other guys–active managers–believe that their fundamental analysis yields them a competitive advantage.
    • Research has shown that there is a clear advantage in any portfolio to hold at least 30 different positions.

  • The DuPont Equation

    • High margin industries, on the other hand, such as fashion, may derive a substantial portion of their competitive advantage from selling at a higher margin.

  • Arbitrage Pricing Theory

    • Market actors will take advantage of this opportunity, and through buying or selling the asset, push the price of the asset back to its true value.

  • Total Assets Turnover Ratio

    • Companies in the retail industry tend to have a very high turnover ratio due mainly to cut-throat and competitive pricing.
    • Intangible assets are non-physical resources and rights that have a value to the firm because they give the firm some kind of advantage in the market place.

  • Factors Controlled by the Firm

    • It can also offer tax advantages.
    • For example, higher fixed costs can result in wider variations to operating income from numerous factors - increased competition, slower economic growth, etc.

  • Overview of the International Business Environment

    • A firm's ability to design and adjust its internal variables to take advantage of opportunities offered by the external environment, and its ability to control threats posed by the same environment, determines its success.
    • As the currency of a country depreciates, its competitiveness is improved since its goods are cheaper than other countries', helping companies export more.
    • Another interpretation is that the difference in the rate of change in prices at home and abroad—the difference in the inflation rates—is equal to the percentage depreciation or appreciation of the exchange rate so that the competitiveness of one country could be maintained.

  • Expanding into Foreign Countries

    • Financial analysts and economists divide the world's markets into mature economies and emerging markets.Mature economies are competitive, and a company entering this market would face narrow profit margins.Some examples include the United States and Europe.On the other hand, the emerging-market economies are countries that recently opened their markets to international trade and finance.They can be very profitable but entail greater risk.For example,China, India, and Mexico are removing their government controls of their markets, and they allow international investors and corporations to invest in their economies.
    • Reason 8: Businesses and companies reduce their production costs.Consequently, many U.S. manufacturing companies moved to China and Mexico to take advantage of the lower wages and comparable productivity.
    • Reason 9: A company outsources its production to another company, usually located outside the country.For example, Microsoft outsourced its production of X-box consoles to Flextronics, a Singaporean company.Then Flextronics outsourced the production to a Chinese manufacturing plant.Consequently, outsourcing can lower a company's cost, granting it a cost advantage over its competitors.

  • Advantages of Leasing

    • The main advantage of leasing lies in a business' ability to attain assets without outlaying essential cash.

  • Advantages and Disadvantages of VC Financing

    • Advantages: The primary advantage of venture capital financing is an ability for company expansion that would not be possible through bank loans or other methods.