by Joseph Kiwia

Created on: August 18, 2008

Why some companies lose their competitive advantage.
To prosper in business operation and achieve their goals, companies have to analyze the business environment so as to make a competitive advantage. Severally, some companies have been losing their competitive advantage because they don't adopt new technologies. When a company fails to adopt new technologies as its competitors are doing in the market, it will definitely lose its competitive advantage. There has been occurring changes in technologies in the way products are designed, technologies in production and delivery of products to consumers. Companies which do not adopt the current technologies in production, operations and marketing lose their competitive advantage leading to poor performance in the market.

Consumers have their own needs, tastes and preferences. New and shifting needs, tastes and preferences by the buyers have made companies to lose their competitive advantages. This is because a product which was being preferred by the consumers may lose its effective demand when they change their needs and wants. This makes companies to have low sales turnover because their products preference by consumers has decreased or ceased completely. In this case, a company will loose its competitive advantage due to losses it will be making in the market in its operations. It is worthy while for companies to produce what consumers prefer and need at a particular time and educates them about the uniqueness and utility of your products to maintain their loyalty to the company.
Emergency of new industry segment will make companies to lose their competitive advantage. Entrance of new competitors in the short run or long run in the market with new substitute goods will make old companies to lose their competitive advantage. This is because consumers will tend to test and experience by using new products which are brought in the market. The new competitors may sell their product in low prices making consumers to shift their preferences and needs to their products. The existing company will thus loose its competitive advantage as its products lose effective demand because the consumers opt for the substitutes or new products.
Changes in government regulation also make companies to lose their competitive advantage. When the government increases its taxation policy, companies will transfer the burden to the consumers by increasing the prices of their products and services. This reduces effective demand of their products

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