Factors causing failure/success of a firm

Introduction: A failing company is an entity whose profit rate is substantially lower than the average profit rate of its competitors. A company can lose its competitive advantage but still not fail. It may just earn average profits. Failure implies something more drastic. Failing companies typically earn low or negative profits – meaning the company is at competitive disadvantage. Companies which succeed in building a competitive advantage and sustaining the durability of their competitive advantage, can be considered as successful companies. On the other hand, companies that fail to build and sustain durability of their competitive advantage are considered as unsuccessful companies.

Competitive Advantage: A Source of Success

The four factors essential for building competitive advantage are:

 Efficiency
 Innovative capability
 Product quality
 Customer responsiveness

These factors are determined by the strengths and weaknesses of...