'Differentiating capabilities' costs contribute to a company's competitive advantage by providing a unique value proposition that sets the company apart from its competitors. These costs are associated with core competencies or unique capabilities that the company possesses. By investing in these areas, the company can offer products or services that are superior or different from those offered by competitors, thereby gaining a competitive edge. However, it's important to ensure that the benefits derived from these capabilities outweigh the costs.
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