What is a temporary competitive advantage?

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What is meant by a temporary advantage?

A temporary competitive advantage is one that companies have for a limited time – potentially several years where the firm is able to capitalize on a rare resource that it has before other firms are able to catch up. 

What makes a resource a temporary advantage?

Resources that give a temporary advantage are ones that are currently rare and valuable, but can be developed by other firms. Potentially over time, other firms are able to imitate the resource, developing their own version of that resource. Or they can develop a different approach that substitutes for the resource.

It may take a period of time before competitors are able to develop these resources though – giving a window of opportunity for the company with the valuable and currently rare resource to enjoy a competitive advantage before other firms are able to catch up.

How long will a resource give an advantage?

When we consider a temporary advantage, it is important to be aware of how long that advantage is likely to last. If it is particularly easy to imitate the underlying resources, then the advantage may be particularly short-lived – potentially only a few months before other firms are able to develop a comparable resource. If on the other hand it si more difficult to imitate, the advantage may last for several years.

Are temporary advantages bad?

Temporary advantages are certainly not bad – they may give the firm a key advantage in the short term – but it is also important to be aware that the advantage may disappear over time. Other companies can likely catch up – the advantage that you have is likely to be short-lived, and while beneficial, the firm should be thinking about what else it can do to develop other advantages. 

Using the VRIO framework to example the sources of competitive advantage

The VRIO framework is one approach for assessing the resources, determining which are likely to give a temporary competitive advantage (based on being valuable and rare), and which may give a sustainable competitive advantage because those resources are hard to imitate or substitute.