The formula for success: competitive advantages and main strategies

HOW DOES ONE ACHIEVE LEADERSHIP? There is no magic formula. If we think of large companies or market leaders such as Netflix, Amazon, Inditex and Mercadona, we see that each of them has its own competitive advantage. The market is constantly changing, competition is increasing and new business initiatives are appearing. It is therefore important to know how to identify the actions that will allow you to make a difference.

These may include: innovation, customer loyalty, company and market analysis, pricing, intention to internationalize or expand, cost optimization, mode of financing, employees, and forward thinking. In order to be able to make decisions and formulate beneficial strategies, it is important to carry out an analysis of the competition and an internal analysis of the company itself.


The competitive analysis is an analysis of the resources, capabilities, strategies, competitive advantages, strengths and weaknesses of the competition. This is done with the objective of being able to make decisions or formulate strategies that allow us to compete with them in the best possible way. We can take advantage of their weaknesses and take as a reference the actions that are giving them good results. How can we perform a good analysis of the competition? We must follow five steps:

  • Determine the need or objective of the analysis
  • Determine what information we will need, and therefore, what we will collect.
  • Collect information
  • Analyze the information
  • Making decisions or formulating strategies

It is often thought that competitive analysis is something that is only done when starting a new business or entering a new market. But this task should be performed constantly, especially when companies are launching new products to the market more and more frequently, and when more and more competitive companies are appearing.


The SWOT Analysis is a tool that analyzes and defines the current situation of your business in order to make the right strategic decisions. It is common in a strategic plan as well as in a business plan or a market study. By analyzing the external environment and the internal characteristics of your business, this business management tool allows you to obtain a graphic representation of your weaknesses, threats, opportunities and strengths.

The SWOT analysis is supplementary to the SWOT analysis, and serves to define the basic actions that you can apply to each of the factors that you have identified in your SWOT matrix. That is, to correct the weaknesses of your business, to face the external threats that the market presents to your business, to maintain the intrinsic strengths of your business, and to exploit the opportunities that the market offers you.


Once an analysis of our business and our competitors has been carried out, it is time to make decisions and formulate strategies. Competitive strategies make it possible to achieve an advantageous position over the rest of the competitors, which translates into the achievement of a competitive advantage sustained over time and which means greater profitability. Michel Porter defined three types of competitive strategy:

  1. Cost leadership strategy: A company achieves cost leadership when it has lower costs than its competitors for a similar product or service. Thanks to its cost advantage, the company is able to lower its prices to the point of nullifying its competitor's margin.
  2. Product differentiation strategy: A company has a competitive advantage in product differentiation when it offers a product or service that, while comparable to others, has certain characteristics that make it unique in the eyes of customers. As a result, consumers are willing to pay more for that product.
  3. Segmentation strategy or approach: This strategy is based on focusing on a specific market segment, creating products and services specially designed to respond to their needs and preferences. For example, a company may focus on a specific consumer group, geographic market or product line.

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