The Difference
Competitive advantage is a broad term that applies to anything that gives a firm an advantage over the competition. This can include economic advantages, relationships, processes and know-how.A distinctive capability is a competitive advantage that is based on a business capability such as innovation, marketing or design.Example
Competitive advantage includes things such as political connections and economic advantages that are positions as opposed to operational capabilities. For example, a hotel that has the only beachfront property available on a popular beach may be able to charge higher prices and maintain a higher occupancy rate than all other hotels in a particular resort area. The hotel may have mediocre business capabilities in areas such as customer service but their position is firm nonetheless.A distinctive capability applies to things that a particular firm does better than all other competition that the competition find impossible to replicate. For example, a firm that consistently innovates faster than the competition to produce superior products.| Competitive Advantage vs Distinctive Capability | ||
Competitive Advantage | Distinctive Capability | |
Definition | A superior position or business capability that gives a firm an advantage over the competition. | A superior business capability that competition find impossible to duplicate over an extended period of time. |
