Mastering Competitive Advantage for Non-profits

Sustainable competitive advantage benefits non-profits by providing a strategy that is not duplicated by the competition. Achieving competitive advantage requires specific commitments, decisions and actions by the social entrepreneur. A unique mix of five essential components can create a sustainable competitive advantage:

• Rivalry concerns like industry growth, fixed costs, differences in offerings and missions, brand identity, diversity of competitors, switching costs, and exit barriers all lead to competitive advantage.
• Buying power and bargained leverage including concentration, volume, switching costs, information and substitution for products can also lead to competitive advantage.
• Price sensitivity including total purchases, product differences, brand identity, impact of quality and performance and incentives also lead to competitive advantage. Supplier power including the different mix of inputs, switching costs, supplier concentration and volume leads to competitive advantage. 
• Entry barriers including economies of scale, proprietary product differences, brand identity, capital requirements, distribution, cost advantages, learning curve, government policies and expected retaliation impact competitive advantage.

As social entrepreneurs craft their solution for the under-served population (target market segment), they can work with any of these factors to create an advantage unique to them over the rivals in the industry. However, the threat of substitution always exists as buyers may find a suitable substitute with low switching costs and matching or better benefits for its cost (time or money).

For example, animal rescues and wildlife sanctuaries can obtain competitive advantage over their rivals by partnering with feed companies to obtain buying power thereby lowering the cost of feed. They can trade in kind by offering their brand and logo to advertise social purpose and conservation practices on behalf of the feed supplier.

Non-profits working on poverty issues can partner with the government for grants and special programs designated in the Obama ‘Promise zones’ plan.  This would give these non-profits competitive advantage over others who do not serve the same social cause.