Column 3 · Resources and Capabilities · Era 1, Foundations (to 1969)
Differential Advantage
Inputs: resources and assets · Major · Cluster II, Resources and Orientation
Description
Alderson's functionalist theory holds that firms survive by achieving a differential advantage, a distinctive position in the eyes of a market segment, arising from heterogeneity of demand and supply and from the sorting and transforming activities of intermediaries.
Managerial Implications
Advantage comes from being different in ways customers value and rivals cannot easily copy, not from being marginally better at the same things. Ask of each product, channel, and service element: what do we do that no competitor does, and does a customer notice? Build strategy on those few differences, protect them, and let the undifferentiated parts of the business run at low cost.