Competitive Advantage and Comparative Advantage Essay

What is the difference between competitive advantage and comparative advantage? concludeAn advantage that a firm has oer its competitors, that differentiates the Product or function offered by the firm and allows the firm to reduce its Cost or generate Higher Revenue or Margin is known as Competitive Advantage. A competitive advantage is something that a consumer views in a product or service as having higher value than the some other competitors of the firm in the industry. It is an expertise that unmatched firm has. There be many types of competitive strategy that a firm adopts so as to give a competitive advantage to the firm. E.g. Cost leadership A firm produces the lowest cost product in the entire industry. proportional Advantage When one firm/ clownish is able to produce Goods or Services at a lower Opportunity Cost over another firm/ country, it is said to have a Comparative Advantage. For E.g. if one country uses more machines and produces 10 units of each nub and Clot hes in one hour. And another country uses fewer machines and produces either 4 Meat or 6 Clothes in an hour, each country ignore gain from trade because their internal trade-offs between Meat and Clothes are different. The country that uses fewer machines has a Comparative advantage in producing clothes, therefore it is more secure to produce and trade Clothes with the other country. The country that uses more machines has a comparative advantage in producing Meat, hence it is beneficial for them to produce and trade Meat with the other country.