Competitive advantage focuses on seeking and addressing some of the criticisms of business strategy and competitive advantage. This theory was proposed in 1985. Porter has emphasized on the fact that growth and productivity of companies is linked directly to business strategies adopted by them. It is a fact that competitive advantage depends on the fact that for a company cheap labor is highly essential and having high amount of natural resources, and raw materials are highly beneficial for a good economy. The core emphasis of competitive advantage focuses on attempting maximizing the value of economies of scale for goods and services which require premium pricing and which have certain value. From a literal perspective, competitive advantage could be defined as ability of a firm in staying ahead of its competitors and as a result it can perform in a superior manner by adopting a strategy of competitive advantage which ensures market leadership (Dyer and Singh, 1998). It also provides a thorough understanding that assets and resources which are held by a company and also the business strategy which it adopts will certainly have a huge impact for it to generate a significant competitive advantage.
Another example of adaptation of cost leadership strategy is Ryan-Air. The company is a prime example of low-cost budget airlines, which have fewer air-planes than most of the major airlines in the world and are able to achieve a major market share being able to offer a relatively cheap flight service at a low price which is cheaper than other potential incumbents (Zott and Amit, 2004). Ryan-Air offered low-cost airlines to make a customer base but when markets had expanded, it had also offered low-cost attributes which had adopted a strategy of cost leadership.