Long-term action plan that is devised to help a company gain a competitive advantage over its rival. This type of strategy is often used in advertising campaigns by somehow discrediting the competition's product or service. Competitive strategies are essential to companies competing in markets that are heavily saturated with alternatives for consumers.
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.
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.