Strategy · business glossary
What is Competitive advantage?
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
definition
Any factor that allows a business to outperform its competitors on a sustained basis.
Competitive advantage explained
A competitive advantage is anything that lets a business deliver more value or lower costs than rivals.
example
Lower costs through scale, a trusted brand, unique technology or a better location.
why it matters
Without one, competition drives prices down to cost.
common mistake
Assuming advantages last forever; they need constant renewal.
Frequently asked questions
What is Competitive advantage?
Any factor that allows a business to outperform its competitors on a sustained basis. A competitive advantage is anything that lets a business deliver more value or lower costs than rivals.
Why does Competitive advantage matter?
Without one, competition drives prices down to cost.
What is a common mistake with Competitive advantage?
Assuming advantages last forever; they need constant renewal.
Related terms
Moat
A durable competitive advantage that protects a business from being easily copied or displaced by competitors.
Core competency
The specific capability a business does better than almost anyone else, and which its strategy should be built around.
USP (unique selling proposition)
The single clearest reason a customer should choose you over every alternative, including doing nothing.