In a world characterized by durable products, stable customer needs, well-defined national and regional markets, and clearly identified competitors, competition was a “war of position” in which companies occupied competitive space like squares on a chessboard, building and defining market share in clearly defined product or market segments. The key to competitive advantage was where a company chose to compete. How it chose to compete was also important but secondary, a matter of execution. As markets fragment and proliferate, “owning” any particular market segment becomes simultaneously more difficult and less valuable. As product lifecycles accelerate, dominating existing product segments becomes less important than being able to crate new products and exploit them quickly. Meanwhile, as globalization breaks down barriers between national and regional markets, competitors are multiplying and reducing the value of national market share. In this more dynamic business environment, strategy has to become correspondingly more dynamic. Competition is now a “war of movement” in which success depends on anticipation of market trends and quick response to changing customer needs. Successful competitors move quickly in and out of products, markets, and sometimes even entire business. In such an environment, the essence of strategy is not the structure of a company’s products and markets but the dynamics of its behaviour. And the goal is to identify and develop the hard-to-imitate firm resources that distinguish a company from its competitors in eyes of the customer. In order to overcome these challenges and to be the winner of this war of movement, organizations must attain competitive advantage and also understand the business milieu -the economic and social changes affecting a business. Understanding how these conditions increase the pace of change illuminates why organizations must become more flexible, open, and responsive to milieu conditions. An increased pace of change increases the amount and intensity of competition as new competitors enter markets. Under these circumstances organizations must learn how to attain competitive advantage to respond to the intense competition; in other words, how to implement strategies that exploit their internal strengths, through responding to environmental opportunities, while neutralizing threats and avoiding internal weaknesses. But a firm’s competition does not include only all of its current competitors, but also potential competitors poised to enter its industry at some future date. So the strategy being implemented by that firm must be a value creating strategy, not simultaneously being implemented by any current or potential competitors. From this point of view, in this research, a competitive advantage model for the analysis of the sources of competitive advantage, integrating the two basic streams of competitive advantage theory (i.e., Porter’s competitive advantage model and the resourcebased view) has been developed. This competitive advantage model makes it possible to analyze the relationship between the environment, firm resources (resources and capabilities) and competitive advantage, and to determine the internal and/or external sources of competitive advantage. The model defines the environment in terms of the resources required by firms and focuses on environmental munificence dimension which is defined as “the extent to which the environment provides enough resources to support established organizations and new entrants and to enable them to grow and prosper”. And for firm resources, resource and capability dimensions of the resource hierarchy were taken into consideration. A resource includes all tangible and intangible assets and skills controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness and hold the potential of competitive advantage. A capability is the capacity of a firm to perform the basic functional activities better than competitors in order to affect a desired end, by means of resource teams. This study addresses three major questions: (i) Whether industry-specific or firm-specific factors account for a more significant portion of the position of advantage variations? (ii) In order to attain competitive advantage, which firm resources should the firms possess? (iii) In order to attain competitive advantage, in which types of environments should the firms compete?