According to Michael Porter , a sustainable competitive advantage is the key to creating long – term value for shareholders at the business unit level . His book Competitive Advantage is published in 1985 . He views the business system as a value chain . To him , value is the amount the customers are willing to pay for the output of the firm . Business is profitable so long as the total value exceeds the total costs incurred in all the firm’s value activities .
The ultimate aim of business is to create user value that exceeds the cost of doing so . A firm’s competitive advantage depends not only on its value chain but also on those of its supplier and user systems .
Value activities of a business are of two types – primary and support . Primary activities transform inputs into outputs and in delivery and support after sale . Support activities support the primary activities and each other – these include procuring inputs , managing  HR , developing technology and providing general administrative functions .  Whereas primary activities are line activities , the support activities are staff functions .
Five Primary Activities
     Input logistics  receives , stores and distributes inputs . These include warehousing , inventory control , materials handling , inspection and returns .
Operations  transform inputs into outputs . These include machining , assembling , curing , packaging .
Output logistics collect and distribute the output to the users . These include transportation , order processing , finished goods warehousing and vehicle scheduling .
Marketing and Sales  facilitate the exchange of the products . These include advertising promotion , pricing personal selling , channel selection channel relations .
Service  provides customer support after the sale to enhance or maintain the product value . These include installation , spares provision , repair , training , adjustments .
Competitive advantage can be achieved at any or some combination or all of the above activities . However , the relative importance of these activities vary from industry to industry . A seller of pins and pencils may not be concerned with after–sale – service , but a computer dealer has to be particular about it .
Different firms in the same industry may choose different competitive strategies , thus changing the relative significance of the different value activities e.g. low –cost airlines choose a ‘ no– frill ‘ strategy and provide fewer services at discounted fares whereas full–service airlines provide a whole range of services including in –flight meals.
Support activities too can facilitate the gain of competitive advantage . The raw materials used can affect the output in terms of cost and quality . Technology can offer a major competitive advantage . Software firms gain due to their human resources . Administration such as participatory style , organisation structure do contribute a lot .
Linkages amongst the activities must not be overlooked . They themselves can be a matter of competitive advantage . Channel linkages provide opportunities for gaining competitive advantages .
A successful competitive advantage will be subject to a cycle – there will be an initial period of product growth followed by a shake–out period , as more and more competitors imitate it or even improve upon it . Ultimately , a competitive advantage becomes a competitive necessity  as most organisations adopt it .
Competitive advantage is sustained by adopting legal methods such as patents , exclusive licensing and preferred access to scarce resources . Alternatively , complex advantages or more subtle advantages are built . Competitive find it difficult to observe / understand them . This is possible by concentrating on indirect support activities such as technology development , HR development or improved general administration .
Marketing Research :  Is It Always Necessary ?
Steve Jobs’ approach was to figure out what the customers are going to want before they do – you have to anticipate their wants.Henry Ford once said if his customers were asked what they want, they would have opted for a faster horse.You have to show people the new products.Till then they do not know what they want.Steve, therefore, did not rely on market research.As an organisation, we must read things that are still not on page.According to him, there should be a deep current of humanity in the innovations.Steve built Apple on the strength of great products, and unlike others did not allow the sales people to dominate the scene.