Running a business has always been an onerous task, and nowadays, in the digital era, the cut-throat competition is so intense that having an efficient and result-driven Competitive Strategy is inevitable.
In this article, we will be unravelling the hidden layers of competitive strategy and understand how can you make your business strategy to beat your competitors.
Introduction to Competitive Strategy
Suppose you are starting a new business and you have to set some goals for it. What would be one of the most important goals for the business of yours?
You would want to gain some edge over the competition that you have on the market, right? This is not just you who is thinking like that about their company as there are so many other businesses with the same goals and objectives.
However, in order to achieve that goal of getting a competitive advantage of rival companies, there is a need for proper planning. What process has ever been completed without proper planning about it first?
Same is the case here.
If you want to make sure that you have a competitive edge over the other on the market who are doing the same business as you, then you need to have a plan. That is why most of the businesses these days want to create the best competitive strategy in order to gain an advantage over their rivals.
The evaluation of the strengths, weaknesses, threats, as well as the opportunities for the business, happen after which the results are compared with the ones obtained from the other companies.
After that, the company will be able to create a perfect plan which can help them in getting a competitive edge over the other in the business world. This is one of the main reasons why the competitive strategy is so popular, and companies from all over the world want to use it to get the results that they want for their business.
Definition Of Competitive Strategy
In order to have a complete understanding of the concept of competitive strategy, it is important for people to know more about what it is. So, it is important that we start with the definition of the term.
Well, a competitive strategy can be defined as the action plan which takes place over a long period of time and is used by different companies and firms in order to gain a competitive advantage over the rivals that they tend to have in the business industry.
The main focus of the entire strategy is to make sure that the company is able to get the position which is above average and is able to generate some of the best ROIs as well.
So, in a way, it can be said that competitive strategy plays a very important role in making the business a huge success in the industry.
Why Competitive Strategy is important for the Businesses
This is a strategy that is very important for the brands and firms that want to make sure that their competitive market place is not compromised by the services and products which are similar in other companies.
With the help of competitive planning, the companies can always stay one step ahead by analyzing their results and comparing them with their own. They can create plans to move forward, which is certainly a great thing for the businesses.
Michael Porter’s Competitive Strategy
In order to know a bit more about competitive strategy, it is important that people get to know who came up with this concept in the first place.
Well, a competitive strategy was presented by a professor teaching at Harvard who went by the name of Michael Porter.
He was the person who was responsible for the concept of being born, and he provided some other information about the term as well. According to Michael Porter, there were 4 different types of competitive strategies.
The businesses from all over the world apply 4 of these basic strategies in order to gain a competitive advantage over the rivals.
In order to make sure that the businesses are able to properly understand the concept of competitive strategy and use it in their business activities, they need to know all that they can about the core principles of these 4 types of competitive strategies.
This is in order to make sure that they can make some informed and educated decisions while they are creating a plan or competitive strategy for gaining an advantage over the competitors.
Explaining The Goal Of Competitive Strategy
We all know that there is a lot of competition on the market these days. There are many new startups and businesses that are being launched every single day. So, surviving in this competitive market can be difficult for companies if they don’t have a plan.
This is where competitive strategy comes to help. The main goal of competitive strategy is to make sure that businesses are able to know what it takes to get ahead in the competition from their rivals.
Types Of Competitive Strategies
According to Michael Porter, there are 4 different types of competitive strategies that are used by people these days.
So, for the businesses that want to have a competitive edge and advantage over the others, it is important to know all about these 4 different types of competitive strategies. Hence, we are going to mention them right here.
Make sure that you are reading all of these parts carefully so that you can always have an understanding of the topic that we are talking about.
By knowing all about these 4 types of competitive strategies, you can make sure that your businesses are always on the top when compared to the ones that your rivals have.
#1. Cost Leadership
In this strategy, the main goal of the company is to make sure that it is the producer of the lowest cost in the entire industry.
This goal is achieved by the business with the production of items on a large scale, and that is what enables the company to attain some economics of the scale.
The higher utilization capacity, the great power of bargaining, better technology, more implementation and some of the most important things that the businesses need to take care of when they want to achieve the goal of cost leadership. So, this is a very important thing to keep in mind.
#2. Differentiation Leadership
This strategy works differently. With the help of this particular strategy, the business will be able to maintain all the unique features that they have for the products, and there is no doubt that it helps the company in the creation of a differentiating factor.
With the strategy in hand, the companies will be able to achieve a certain kind of leadership in the market as well.
The price change in premium products due to the addition of high value is one of the strategies to use. Brand quality is also increased in such cases. So, it is also one of the most important strategies to use.
#3. Cost Focus
With the cost focus strategy, the company will concentrate on certain market segments that are specific and will make sure that the products that they are selling are all low priced.
This is to make sure that the customers can have all the benefits and the satisfaction of getting the products and that too at an affordable rate.
Another one of the benefits for the companies that use this strategy is that they will be able to gain more and more popularity amongst the people.
This is because when more people want to buy their products due to lesser rates. They will also like other people to know about it. This is another one of the main reasons why people tend to use this strategy a lot when it comes to gaining a competitive edge against rivals in the market.
#4. Differentiation Focus
This is the last but not the least that we have on the list here. The differentiation focus strategy is something that the brand uses when it comes to making sure that the company is differentiated from the other competitors which belong to certain segments.
This is a certain type of amazing differentiation which is made to make sure that the border customers are satisfied with the products that they get.
These border customers always tend to avoid the products of the competitor only because these products don’t have all the smaller features that they need.
Hence, this is a very important thing that companies need to keep in mind when they are using this particular strategy for gaining a competitive edge over their rivals in the market.
Without the use of these strategies, the company will not be able to gain a competitive advantage of the rivals that are present in the market these days. Hence, the firms and the companies need to know all that they can about the competitive strategy types.
So, these are some of the things that you need to know about competitive strategy and how it can help the businesses in ensuring the success and growth of their company.
With the help of these amazing competitive strategies, there is no doubt that you will be able to make sure that you always stay a step ahead from the competitor s in the market.
What are you waiting for then? Go ahead and use these amazing competitive strategies right now to see the results.
Would you like to share you who are your competitors? Tell us to know how you can tweak your business strategy to beat your competitors.