IT Alignment

Competitive Advantage

Value creation is the key to profitability and competitiveness. The achievement of value is a necessary but not sufficient condition for competitive advantage. Another necessary factor is the number of available products from other firms that provide the same kind and extent of value to customers. Both the rareness of competing offerings and high customer value are central conditions for increasing a firm’s performance. Both conditions impact prices, demands, and revenues.

Product rareness comes from differentiation strategies. The corresponding customer value categories are product leadership and customer intimacy. If there are numerous comparable products from competitors on the market, then there is a high competition on prices. In this situation, cost pressures on firms are high and customers receive economic advantages that stem from low prices. Operational excellence is required to compete and survive on the market. Successful firms must pursue a cost leadership strategy and produce at lowest costs; business process flows must be highly efficient.