The Difference between Competitive Advantage and Comparative Advantage

In the government life, we often hear or many people say about Comparative Advantage and Competitive Advantage. To understand both these advantages, the author tries to provide insight and understanding, as will be explained below:

1. Competitive Advantage

According Tangkilisan (in his book titled Human Resource Management of Excellence Public Service Strategy, 2003) that the Competitive Advantage is referring to the ability of an organization to formulate strategies that put the organization in a favorable position relates to other companies. Competitive advantage arises when customers feel that they get more value from the transactions that carried out by a rival organization. In the Dictionary of Indonesian by Badudu-Zain (1994), it is stated that competitive advantage is highly competitive and competition. Starting from the two sources above, we argue that competitive advantage is the superiority that possessed by the organization, where its superiority used to compete with other organizations, to get something, example, companies engaged in banking, each of them how to seek and to attract customers as many as possible with a way to compete in accordance with the superiority owned.

2. Comparative Advantage

Definition of Comparative Advantage can be seen on Indonesian dictionary, by Badudu-Zain (1994), in which comparative is interpreted as comparison or a comparison statement. Thus, comparative advantage is an advantage that is owned by an organization to be able to compare with other organizations. With the point of the meaning, we argue that comparative advantage that the comparative advantage is the advantages that owned by possessed organizations such as human resources, facilities, and other property, which are utilized to achieve the goals of the organization or a combination of several organizations’ advantages to achieve common goals. Example, some agencies / government institutions are utilizing all advantages they have, and they have one common goal, namely to realize the VISION and MISSION that they had made together.

Therefore, it is clear that comparative advantage is about how to achieve a common goal with all the advantages of an organization has, whereas the competitive advantage is about how to utilize the advantages that possessed by the organization to be able to get the organization’s goals, with a way to compete with other organizations.