Establishing competitive advantage is one of the keys to business success (David, 1999) therefore understanding the critical success factors of competitive advantage is essential. What is competitive advantage? Competitive advantage is having a favorable position over all challengers in a common endeavor (Liou and Tang, 2009). Thus organizations that establish competitive intelligence programs or research departments that invest in identifying major rivals and determining their strengths, weaknesses, capabilities, opportunities, threats, objectives, and strategies can potentially position the organization in a favorable position to capture large segments of the market (David, 1999).

Critical success factors for establishing competitive advantage in the 21st century involves developing the ability to invest in the future while being profitable in the present (McGarth and MacMillan 2009), developing the ability to adapt to the environment, developing the ability to take risks, developing the ability to capture the tacit knowledge (knowledge stored in individuals minds) in the organization and developing the ability to invest in knowledge capital. McGarth and MacMillan (2009) recommend leaders move from the old paradigm of business as usual to adopting new strategies to develop competitive advantage.

Business leaders must adapt new heart-sets and mind-sets to effectively meet the challenges that exist in the internal and external environment of the 21st century (Karakas, 2007). Gone are the days when a business can sit back and rest on the success that is acquired when first entering a market or being satisfied with the current stable of products. Business leaders must constantly be developing new product lines and be willing to prepare for an organizational future that may result in the organization doing business that is completely different from their core business. McGarth and MacMillan (2009) recommend initiating a renewal process, evaluating change options using financial models, and mapping the future growth portfolio as strategies to employ in meeting the challenge of developing competitive advantage.

Competitive advantage then can be defined as the ability to take all that is good and all that is bad in a company and evaluate it, redefine the purpose, rethink the health of the organization and constantly viewing the organization as entering the market regardless of how long the organization has been established or how profitable it may be. Therefore, competitive advantage is result of implementing strategies to take advantage of the critical success factors of developing the ability to invest in the future while being profitable in the present (McGarth and MacMillan 2009), developing the ability to adapt to the environment, developing the ability to take risks, developing the ability to capture the tacit knowledge (knowledge stored in individuals minds) in the organization and developing the ability to invest in knowledge capital.

References

David, F. R. (1999). Strategic management: Concepts and cases (7th ed.). Upper Saddle River,

NJ: Prentice Hall.

Karakas, F. (2007). A portrait of the leader in the twenty-first century, Leadership in

Action. 26(6), 23-24. Retrieved June 11, 2008, from Academic Search Premier

database.

Liou, F. and Tang, E. (2009). Competitive advantage, value creation and du Pont identity.

The Business Review, 12(2), 127. Retrieved September 21, 2009, from ABI/INFORM

Global database.

McGarth, R. G. and MacMillan, I. C. (2009). How to rethink your business during uncertainty.

MIT Sloan Management Review, 50(3), 25-30. Retrieved September 21, 2009, from

ProQuest Multiple databases.

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