Final answer:
Successful company performance leading to competitive advantage is driven by effective cost management and continuous innovation. Cost management increases profits by decreasing production costs, while innovation provides a temporary lead over competitors through new technologies or product enhancements.
Step-by-step explanation:
Two critical factors that drive successful performance for a company, leading to a competitive advantage, are cost management and innovation. Effective cost management enables a company to produce goods and services more efficiently, thus increasing profits by decreasing the difference between revenues and costs. Firms strive to lower production costs through optimized combinations of labor, materials, and machinery, which are the inputs or factors of production. Such management not only maximizes profits but also allows firms to offer competitive pricing or increase their investment in other areas such as research and development.
Meanwhile, innovation stands as a formidable driver of competitive advantage. Companies that prioritize innovation exploit market competition as a motivator to discover new technologies or enhance product features. This relentless pursuit of innovation, as mentioned by Gregory Lee, CEO of Samsung, provides businesses with a temporary lead over competitors resulting in above-normal profits. Embracing technology and globalization shifts, innovative companies can cater to a broader market and enhance consumer experience, further solidifying their market position.
Combining cost management strategies with a culture of innovation thus ensures that businesses not only perform successfully in the present but also adapt swiftly to future market dynamics, sustaining their competitive advantage over time.