Final answer:
Competitive edge refers to the unique advantage that makes a firm more appealing to customers compared to its competitors. It can stem from innovation, quality, cost efficiency, or other factors. Maintaining this edge requires constant assessment and adaptation to market changes.
Step-by-step explanation:
The term competitive edge refers to a particular characteristic that makes one firm more attractive to customers than other firms. This edge could be due to superior quality, innovation, cost-effectiveness, branding, or any other aspect that places a company ahead of its competitors. For instance, an innovative firm that discovers new technology might gain a temporary edge, allowing it to earn above-normal profits. This edge is pivotal in today's markets, which are shaped by rapid advances in technology and globalization, increasing the range and intensity of competition.
As markets evolve, businesses must continuously assess their positions and the positions of their competitors through a strategic assessment of strengths and weaknesses. This ongoing assessment helps a firm maintain or improve its edge. For example, a gas station in a prime location may innovate by adding new services to attract customers, thereby maintaining its competitive edge against new rivals.