Strategic Advantage or Disadvantage Definition & Application Wiki

Strategic Advantage or Disadvantage Definition & Application Wiki

Last Updated by WikiWealth

Strategic advantage is the most fundamental and persistent advantage that the target companies possess over it's competitors over the very long term. These advantages or disadvantages are generated by the companies actions.

For Example: Wal-Mart strategic advantage is their low prices. Their always have the lowest prices, which puts any competitor at a disadvantage when compared directly to Wal-Mart (aka: Kmart). Coca-Cola has their brand name, which always them to charge higher prices for similar products.

An example of a strategic disadvantage is the travel brokerage industry after the development of online travel services. Travel services are cheaper and more convenient for most people; therefore, the traditional travel brokers were at a strategic disadvantage to low cost online alternatives.

Short term advantages or disadvantages are not useful for a long-term investor. Additionally, externally-generated advantages or disadvantages are better categories as price triggers (opportunities or threats), because they can move the stock price over the short-term, but not the long-term.