Business Strategies For A Competitive Advantage Over Rivals

Operational excellence. Many industry players are facing strong competitive pressure, so cost leadership is another key to success.

Our team decided to choose the “Broad Differentiation” strategy as the basic strategy for our company. We will attempt to differentiate our product line in several distinct dimensions. By providing products that are vastly superior and unique from our competitors and pricing the products with an affordable price, we can gain something that is beneficial for the company in the future, which is customers’ loyalty and awareness. We may change or modify our strategy for the next round depending how it performs against our competitors.

Thompson, Peteraf, Gamble, and Strickland (2012) found that competitive strategy depend on whether a company’s target market is narrow or broad, and whether a company is seeking competitive advantage through low-cost or product differentiation. These two factors reveal five generic competitive strategies. The five strategies are Overall Low-Cost Provider Strategy, Focused Low-Cost Strategy, Broad Differentiation Strategy, Focused Differentiation Strategy, and Best Cost

In order for a firm to create competitive advantage, it needs to create a set of activites that can deliver value to the specific product and services it offers to its customers. To start talking about my life as a “value chain”, I may need to compare it to a specific product”. This is going to take precedence both in my personal life and professional life.

The two generic business strategies are differentiation and cost-leadership strategies, and they are fundamentally different from one another, both with their own drawbacks and risks (Rothaermel, 2013). These strategies are referred to as “generic” because they may be used by any type of organization (Rothaermel, 2013). The drawbacks and risks of a differentiation generic strategy is its viability “is severely undermined when the focus of competition shifts to price rather than value-creating

The strong competition among rivals pursuing a similar strategy is vastly based on product differentiation and a niche market attraction, as companies are constantly working to surpass their competitors and seek to provide just what certain consumers want.

The cost leadership strategy seeks to improve profit margins by bringing down the costs of producing while enabling the organization to still charge market prices. They also focus on increasing the market shares through lower pricing, enabling the organization to continue to reach profits because of reduced costs. As with any organization the goal is to minimize cost directly to the organization providing the delivery of products or services. According to Barney (2007) low cost leadership strategy takes pride in initiating its costs advantage abilities to charge lower prices while reaping the rewards of higher profits.

6. Following trends of marketing: - Innovative, differentiated brands, however, can offer potent advantages. Not only can they offer the consumer real benefits and thus give the consumer a reason to change, they can also serve to outmode existing brands (Murphy, 1988).

The series of activities that are enacted by a firm that add value to a product beyond the cost of the production are referred to as the value chain. Harley Davidson offers a combination of superior performance and unique attributes within its value chain that promotes their core competencies and provides them with a competitive advantage.

A company needs to create a series of programs to differentiate their product from those from its competitors and to appropriately price the product to achieve the maximum demand, in order to set up the dynamics of its competitive strategy (David, 2007). The competitive strategy of a company is also expected to offer better products or services to its customers, at a reasonable cost. Due to the mass influence of the external environmental on the customers’ preference, it is vital for the company to develop an available competitive strategy to be able to solve a series of problems, and ultimately to improve the company’s performance. Those problems include: how to differentiate its products or service from competitors, how to create market segments to maximize demands, and how to offer a wider range of products or services to better meet the customers’ needs at more acceptable costs (David, 2007).

Residual Efficiency High managerial effectiveness, strong organizational culture, motivated workforce committed to the low cost strategy. Product Design However, shades of grey in the distinction between differentiation and cost-leadership (Bowman, 2008); neither are mutually exclusive (Parnell, 1997). Most successful firms exhibit one or more forms of differentiation, along with forms that are directly associated with cost-leadership (Spanos, Zaralis, & Lioukas, 2004). Such firms are said to be following a combined or . ALDI fits this description because it actually improves the quality stakes and keeps the prices down (Osgeowitsch & Goelz, 2011) and thus is offering superior goods relative to competitors in some cases5. ALDI cost-leadership strategy; by extending its thinking to the . ALDI strives not only value its customers expect and by providing this more effectively than competitors, it strengthens its strategic position in the marketplace value-forsense can act as a form of differentiation. Despite the observation that ALDI -leadership strategy could represent a version of for low cost but also focuses on providing value-oriented customers with products that are offerings. An emphasis on cost-leadership in this

The Cheesecake Factory, according to its CEO David Overton, has “broken all the rules” in order to become successful (“2017 Golden Chain Award Winner”). For example, their strategies go far beyond Porter’s understood and standardized theories of low cost versus differentiation (Porter, 1980, 35 and 41). The Cheesecake Factory manages to provide apparently luxurious food to its customers for cheap, thereby both keeping its food low-cost and differentiating their products. Instead of relying on one strategy to become successful, The Cheesecake Factory has the best combination of differentiators: its price and its quality. As a result, The Cheesecake Factory benefits from having the best of both of Porter’s strategies for competitive advantage, thereby conferring upon itself a tremendous marketplace advantage (Hambrick and Fredrickson, 6).

There are also some risks for each strategy. Upholding cost leadership can be risky because of the requirement of frequent capital investment to sustain cost advantage, then cost surges narrow price differentials and diminish ability to compete with other’s brand royalty. Differentiation strategy has some threats, such as imitation decreases alleged differentiation, buyers need for differentiation falls. Meanwhile, the risks for focus or niche strategy are the differences in preferred products or services between the strategic market and target as a whole narrows, the cost discrepancy between wide ranged competitors and the focused firms broadens to eradicate the cost advantages of allocating a narrow target or to offset the

Another generic competitive strategy is broad differentiation strategies. According to Thompson, Strickland, and Gamble, in “Crafting and Executing Strategy”, broad differentiation strategy is seeking to differentiate the company’s product offering from rivals in ways that will appear to a brad spectrum of buyers. A company attempting to succeed through differentiation must study buyers’ needs and behavior carefully to learn what buyers consider important, what they think has value, and what they are willing to pay for. Then the company has to incorporate buyer-desired attributes into its product or service offering

“Competitive strategy involves positioning a business to maximize the value of the capabilities that distinguish it from its competitor’s” (Porter 1980:47). A successful business plan requires first and foremost the formation of an appropriate strategy. Through the implementation of a suitable strategy, the company is able to obtain its own industry niche and gain an understanding of its customers (Porter 1985). Whichever strategy is adopted it must be adequately integrated within the firms goals and missions to achieve a competitive advantage (Parker and Helms 1992).