COMPETITIVE STRATEGY

COMPETITIVE STRATEGY

PRE-READING NOTE

The old competitive strategies of invention and mass production no longer work in an increasingly turbulent business environment. Successful firms and implementing the new competitive strategies of continuous improvement (constant process improvement) and mass customization--a dynamic flow of goods and services via a stable set of processes. This paper provides a "lens" through which managers can assess their firm's current competitive position, build a vision for where they must be in the future, and craft a transformation strategy to turn that future vision into reality.

How to succeed in today's rapidly changing competitive environment is a question weighing heavily on many a manager's mind. Everything seems to be changing-markets, customer demands, technologies, global boundaries, products, and processes. In the midst of this seemingly overwhelming change, managers are being asked to make critical competitive decisions that will affect not only the present position of their firm (the legal or competitive entity), but also its future success.

Much to their dismay, however, many managers are finding out, sometimes the hard way, that it is a different game, and the old rules do not apply anymore. To compete in today's rapidly changing competitive environment, new strategic responses are required that most managers may have never thought possible. In addition, managers must understand that at the heart of these new strategic responses is innovative management through advanced information technologies.

In the dynamic environment of the business world, a firm needs to constantly focus on improving its competitive strategy. Competitive strategy refers to the way a firm can gain advantage over others operating in a similar market. Rivalry drives improvement and innovation.

Without competition, strategy would be irrelevant. Strategy goes beyond operational improvement. Tactics that are easily imitated do not constitute a strategy.

 Simply improving operations or quality cannot lead to a competitive strategy. A competitive strategy utilizes analysis of the structure of an industry and its competitors in order to identify an optimal position. A competitive strategy will also integrate the strengths and resources of the firm to develop a competitive advantage. A sustainable competitive strategy involves continuous improvement with strategic continuity.

Our discussions will focus on the process by which a successful competitive strategy can be developed. The first step to creating a competitive strategy is to analyze the structure of the industry and the nature of competition. Next, we will discuss how to assess the firm’s internal environment. Once a clear picture of the industry structure and firm attributes are identified, we can consider the options for achieving goals and sustaining a competitive advantage. Industry Analysis In 1979, Michael Porter introduced the business world to a framework for analyzing the structure of an industry. His model, commonly referred to as “The Five Forces,” (Supplier Power, Threats of New Entrants, Rivalry, Threat of Substitutes and Buyers Power) takes a broad approach to competitive analysis. These are what we shall explore in this course.

COMPETITIVE STRATEGY

Decisions generate action that produces results.  Organizational results are the consequences of the decisions made by its leaders. The framework that guides and focuses these decisions is strategy. The framework that guides competitive positioning decisions is called competitive strategy.  The purpose of its competitive strategy is to build a sustainable competitive advantage over the organization’s rivals.  It defines the fundamental decisions that guide the organization’s marketing, financial management and operating strategies.

A competitive strategy answers the following questions.

-How do we define our business today and how will we define it tomorrow?

-In what industries or markets will we compete?  The intensity of competition in an industry determines its profit potential and competitive attractiveness.

-How will we respond to the competitive forces in these industries or markets (from suppliers, rivals, new entrants, substitute products, customers)?

-What will be our fundamental approach to attaining competitive advantage (low price, differentiation, niche)?

-What size or market position do we plan to achieve?

-What will be our focus and method for growth (sales or profit margins, internally or by acquisition)?

The key to strategy formulation lies in understanding and overcoming the system barriers that obstruct the attainment of organizational goals.  An effective strategy recognizes these barriers and develops decisions and choices that circumvent them.

ASK FOR THE REST OF THIS PAPER: Tel. +2348033467639