When developing a corporate strategy in business, the organization must decide upon which basis it is going to compete in its markets. This involves decisions on whether to compete across the whole market place or only in certain segments. This is referred to as competitive scope. A further consideration is the way in which the organization can gain competitive advantage, that is anything that gives on organization an edge over its rivals and which can be sustained over time. To be sustainable, organizations must seek to identify the activities that competitors cannot easily copy and imitate.
Organizations must assess why customers chose to use one organization product or services over another. The answer to this question can be broadly categories into two reasons:
1. The price of the products/services is lower.
2. The products/services are perceived to provide better added value.
Decisions on the above questions will determine the generic strategy options for achieving competitive advantage known as “Generic” because they are widely applicable to firms of all sizes and in all industries. The three types of generic competitive strategies that enable organizations to achieve competitive advantage are referred to as “low-cost strategies” or differentiation strategies” or focus strategies. For example, organizations can compete on price-based strategies serving prices to sensitive segments of the market place or they can choose to purpose a differentiation strategy which seeks to be unique on dimensions valued by buyers, such as product design, branding, product performance and services levels, and on the focus side, the strategy is about focusing on a particular buyer group, segment of the product line, or geographic market. The entire focus or niche strategy is built around serving a particular target fully.
To outperform other companies in the industry or market, the company has to follow any of the above said three strategies. Total commitment and supporting organization arrangements are necessary for effective implementation of any of these three strategies.
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