What is above normal profits (competitive advantage)?
The economic definition of competitive advantage can be defined as the ability to earn a rate of return which is greater than normal for the sector or class of risk in which an organisation competes (above normal profits). Competitive advantage has the characteristic of creating imperfect competition in favour of an organisation to give it commercial advantage over others.This is the opposite of the economic definition of perfect competition where all organisations and their products and services are equal (no competitive advantage).Competitive advantage is also a sustainable advantage, not transitory and not easily copied. Opportunities and threats occur for businesses in the environment in which they operate.Competitive advantage is derived from competitors weaknesses and from the market conditions and is realised when an organisation can adapt these to its advantage.Sources of advantage arise from the ability of an organisation to do things better than its direct competitors on the
