Competitive strategy is a comprehensive plan of action

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2020-07-02 22:57:12

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At the beginning of the term “strategy” was only used in the military field. He meant the art of the commander, the ability to control military action, to develop and, of course, to direct the movement of troops. Subsequently, this term was applied to the heads of practically any organization. A leader needs to possess this skill.

The objectives should specify the direction of movement, the direction of the organization. Depends on the result: in France the organization of the results that were intended. Obvious is the fact that the same target can move in different ways. The goals of the organization, answer the question: “that will seek the organization?”. The action plan answers the question: “What to do in order to achieve the objectives?”. The strategy responds to the following question: “What way and how to act and move the organization toward their goals?”.

The Strategy should:

1. To link the past and the future.

2. Specify the path of the development of the organization.

What is the strategy?

This is the General direction that a set of rules, principles with which, provided the achievement of competitive advantages, and sustainable. And other goals set for the organization, based on the capabilities, which it really possesses. Also important relations with elements in the external environment.

There are many strategies to achieve competitive advantage, basic competitive strategies

  1. Leadership in costs.
  2. Differentiation.
  3. Focus (concentration).
  4. Earliest access to the market (innovation).
  5. Synergies.

Competitive strategy "Leadership in costs” is aimed at achieving competitive advantages due to the fact that the cost of important elements of the product should be low. Accordingly, the cost of goods is also reduced, compared with the products of competitors. In short, with lower costs to maximize profits. But this strategy is acceptable in such circumstances, when the demand for products viscoelasticy price, and also homogeneous. Thus, the difference in brand names plays a significant role for consumers. But the enterprise should have access to cheap raw materials, labour, use unique equipment and advanced technology. All these factors reduce the cost. The focus, in this case, should be given to cost reduction and quality, the service here is not so meaningful.

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In contrast to the “Leadership in costs” in order to service the entire market with the use of a standard product, competitive strategy "product Differentiation” aimed at the production of particular products (goods) to consumers who have specific requirements, are willing to pay for uniqueness. In this case, the cost increases, and price accordingly. This strategy resulted in the variety of goods on the market. She has provided branded products are of high quality.

There are the following types of differentiation – four of them:

  1. Product differentiation (based on - the product range of the enterprise).
  2. Automatic differentiation.
  3. Differentiation of personnel.
  4. Differentiation of the image.

For each industry the sources of uniqueness of the original. But the application of this strategy may be unsuccessful in that case, if the increased price will cover the additional costs.

Competitive strategy “Focus” (or specialization) – it is a choice, limited by the extent of private sector economic activity. The range of consumers sharply defined.

“Focus” is radically different from the strategies listed above. Based on the selection of narrow competition within an industry market niches typical of small businesses. The choice of this strategy occurs mainly due to lack of financial resources, but more important reason is the barriers to entry in the industry.

Competitive strategy for innovators is this: a firm offers to the market an original product (service), thus obtaining a sustainable competitive advantage is growing rapidly, gets the exclusive high profits. Features are: high degree of risk, the risk of imitation by competitors, unstable quality. Such a strategy is inherent in both large and small businesses. But there is required a highly qualified staff and large financial resources.

Competitive strategy “Synergies” is a combination of two or more business units under common leadership. In business practice this means that (2+2)>4. It's the transition from quantity to new quality. Assumes the effective operation of the enterprise, contributes to the high profitability, but reduces the efficiency and flexibility of management.

Development of competitive strategy – is a continuous, adaptive and creative process which takes into account changes in the external and internal environment of organizations.

Strategic plan – program of socio-economic activities of the enterprise (organization) and all divisions, which is aimed at achieving the goals.

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