In this master thesis, the topic "Innovation as a basis for creating a competitive advantage of the Ferrero company" was discussed. Ferrero is a globally known company that produces and sells various sweets. The company's success was achieved within three generations whose beginnings date back to 1923 until today when the Ferrero company has become a market leader operating in more than 170 countries around the world and employing over 40,000 people. To gain insight into how the company became a market leader, the company's internal and external environment and environment analysis tools were defined (strategic direction of the company, i.e. vision, mission and goals, SWOT analysis, system of balanced objectives (BSC), PEST analysis, Porter's five competitive model power and BCG matrix) which were analyzed using examples from practice. The paper mentions the long history of the Ferrero company from its beginnings until today, its product range and innovations that led to new products that became globally known brands, and the use of digital marketing. Also, the concept of innovation and innovation process and the concepts of incremental and radical innovation are mentioned. To ensure the originality of this work, a questionnaire was also conducted, which asked respondents a series of questions regarding the innovation and familiarity of the Ferrero company and its products, which have become global brands. Competition in the market and innovation represent complex terms that are interconnected because innovation is very important in terms of creating a competitive advantage and taking the position of the market leader. At the end of the paper, there is a conclusion in which a summary of the discussed topic is given, based on the analysis of the environmental tools of the Ferrero company and based on the data obtained from the survey questionnaire. Available academic books and professional articles and relevant sources available on the Internet were used in the work. The data were collected using the method of research at the table and a survey questionnaire.