What defines a competitive advantage?

A competitive advantage is defined as a factor that distinguishes a company from its competitors, allowing it to generate greater sales or margins and retain more customers than rivals. This differentiation can stem from various sources such as superior product quality, cost efficiency, unique technology, or effective branding. By having a characteristic that sets it apart, a company is better positioned to attract and maintain customers in a competitive market.

The other options either do not fully capture the essence of competitive advantage or are more specific aspects of it. A characteristic that makes a product aesthetically pleasing could contribute to a competitive advantage but does not define it in its entirety. A financial investment in new technology may enhance a company’s capabilities, but it is not inherently an advantage unless it leads to differentiation in the marketplace. An established market share indicates that a company has been successful in capturing sales but does not necessarily illustrate why it can maintain that success over competitors in the long term.