Business School

Competition and competitive advantage

Perceptions about business competition, competitive advantages and strategy by sector.


A majority of CEOs believed they had less than 5 competitors, and 11% believed they had none! These were more likely to be micro businesses, while small or medium-sized businesses reported more competitors. Almost half (46%) thought they had no international competitor. Not surprisingly, the higher the percentage of exports, the greater the number of international competitors. Apart from a small group (47 CEOs) who reported no competitors but profits of at least 30% of turnover, the number of competitors did not have a strong bearing on profits.


Business service firms appear to have more competitors than manufacturers. They were also less reliant on a single or small number of customers. Conventional business service firms appeared to be engaged in more textbook-like competition.

Figure 4: Competitive advantages by growth aspiration

Note: 1 = Insignificant; 2 = Slightly significant; 3 = Moderately significant; 4 = Very significant; 5 = Crucial. Differences between means: *** differences significant at .001; ** differences significant at .01; * differences significant at .05.


Competitive advantages

We asked CEOs about their competitive advantages. Combining "very significant" and "crucial", the top three were: "personal attention", "established reputation" and "responsiveness to recognised client needs" and "product or service quality" (see Figure 4). There were differences between manufacturers and business services. Business service CEOs scored higher only on specialised service/product service and personal attention to client needs, perhaps because of stronger competition from more competitors. High-tech manufacturers accentuated the differences, and in both sectors, high-tech businesses scored significantly higher than conventional businesses on design, personal attention to customer needs and solutions to unmet customer needs. Surprisingly, there were relatively few differences by size.

There were some subtle differences by performance outcome. Fast growers rated established reputation somewhat lower than non-growers or moderate growers. Conversely, they rated personal attention to recognised customer needs higher. And they also rated solutions to unmet customer needs higher.


Industry-level innovators (see below), moreover, placed significantly more stress than firm-level innovators or non-innovators on "product or service quality" and "specialised expertise/product/service." They were also more likely to rate "cost advantages" (and, to a lesser extent, "price advantages") as significant or crucial.