Companies strive to attain a competitive advantage to outperform their competitors, achieve excellent margins, and generate a higher value. However, if the competitive advantage strategy can be easily duplicated and adopted by other competing companies, it should not be considered a competitive advantage. Companies use strategic approaches to attain competitive advantage; the approaches include cost leadership, differentiation, and cost focus.
First, differentiation is the concept of producing a unique product/service from other producers and designing it in a way that hard to duplicate. Products should be designed with profoundly unique and special features that make them outstanding compared to other companies ( Kaleka & Morgan, 2017 ). Second, cost leadership strategy relies on delivering services and production of products that go at a lower cost. Low-cost production is commonly practiced through large-scale operations where responsible companies exploit economies of scale concept. By utilizing economies of scale, a company can produce products at a cost fairly lower than that of the competitors. Lastly, a competitive advantage is earned by providing timely responses to customers. Timely customer response is one of the reliability attributes used by companies to exploit their market share.
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Company: MacDonald’s.
MacDonald's franchises are fast-food restaurants that provide fast-food services, including hamburgers, French fries, Chicken Sandwiches, soft drinks, and breakfast items. Mourdoukoutas (2015) states that MacDonald’s company relies on a cost leadership strategy as its major competitive advantage over other fast-food restaurants. By utilizing economies of scale, the company can produce products at a lower cost translating into a lower selling price that outcompetes competitors. This strategy is also referred to as cheat strategy; it involves extensive exploitation of economies of scale to attain the cost advantage. According to Dudovskiy (2016), MacDonald’s has maintained a high customer speed without compromising the quality of goods being delivered. Economies of scale help the company maintain product and service standardization while taking into account local tastes and preferences during the creation of the menu.
References
Dudovskiy, J. (2016). McDonald's Business Strategy and Competitive Advantage . Business Research Methodology. Retrieved 16 January 2021, from https://research-methodology.net/mcdonalds-business-strategy/.
Kaleka, A., & Morgan, N. A. (2017). Which Competitive Advantage(s)? Competitive Advantage–Market Performance Relationships in International Markets. Journal of International Marketing , 25 (4), 25–49. https://doi.org/10.1509/jim.16.0058
Mourdoukoutas, P. (2015). McDonald's Most Important Advantage. Forbes Magazine , n.p. Retrieved 16 January 2021, from https://www.forbes.com/sites/panosmourdoukoutas/2015/01/29/mcdonalds-most- important-advantage/?sh=f7805d75c41b.
