The ability of a firm to create and sustain a competitive advantage is a significant matter for its profit. Kay says that the proper motivation of achievement of the firm is the added value. So the main aim of the firm is to generate added value, through competitive advantage based on monopoly profits and Ricardian rents. Also a main point that we should write about is that a company has a competitive advantage when it adds value of its output is greater than its total costs including the capital costs. Next, Stalk, Evans, and Shulman adverting to competing on capabilities, argue that competitive advantage depended on the ability to react to developing opportunities that depends on business processes. The fundamental nature of business achievement is choosing the right capabilities to build. Chandler summarizing his immense study of the increase of gigantic industry in the west, hand it to the building of capabilities as the source of the expansion of successful firms and nations. An example in the Perman & Scouller textbook says that "successful companies such as IBM and Bayer were those which made the initial heavy and risky investments in developing capabilities which allowed them to exploit the opportunities available for scale and scope economies". Peteraf in her article in 1993, "The Cornerstones of Competitive Advantage: A Resource-Based View" discusses four circumstances which must be met for sustainable competitive advantage: superior resources, heterogeneity within an industry, ex post limits to competition, imperfect resource mobility, and ex ante limits to competition.

John Kay's in his book, Foundations of Corporate Success explores the nature and impact of what he names "distinctive capabilities", and goes on to discuss what determines the long-run value of a firm's capabilities. Kay mentions to three types of distinctive capability. He calls these Architecture, Innovation, and Reputation. The value of architecture lies in the capacity of organisations which establish it to create and store organisational knowledge and routines, to promote more effective co-operation between the members of the firm, to achieve an open and easy flow of information between members of the firm, including supplier firms and indeed in some cases customers amembers of the firm, and to respond flexibly to changing circumstances. Architecture depends on the ability of the firm to build and sustain long-term relationships and to establish an environment which encourages co-operation and discourages opportunism. According to Kay reputation is a second crucial distinctive capability of a firm. Reputation is a significant commercial mechanism for conveying information to consumers about product quality. Its importance depends crucially on how consumers learn about products and product quality: by search activity, by immediate experience, or by long-term experience in use. Advertising in this case will tend to try improve the experience by association with image and personality so that you become a repeat customer rather than make dubious claims about quality.