No matter what type of business you are running or what type of goals a corporation is trying to achieve, one thing in common with each company is the idea of maintaining a competitive advantage through competitive strategies. There are many different instances and competitive strategies to discuss all using different tactics in order to hold that competitive advantage the owners and stockholders desire. In this example, Nebulon Inc., a light fixture manufacture is looking to maintain its competitive advantage by changing its competitive strategy from a strategy of high-quality differentiation to a strategy of cost leadership. The transition will be a drastic one, but potentially one where if the company does its homework right they will prosper. In this essay, we will go over the transition between these different strategies and what exactly they will mean for this company.
First off, we need to discuss the nature of their business being mainly what
…show more content…
They give a company direction and set goals for the company to try to inevitably strive for. From small businesses to the very top fortune 500 companies, company strategies are used to propel themselves forward within the crowded marketplace and can help define them to be different from the rest. Nebulon Inc in this example is a company that invested time and resources into determining that they needed to be operating using a cost leadership approach and save costs on the production front. It 's unknown what kind of market issues would drive Nebulon to perform this strategy, but it is clear they wanted to cut expenses rather then creating high quality products as they did originally. Hopefully Nebulon did its homework and decided this was the best path, but regardless it is important for any company to want to strive for following a well thought out company
23), a strategy is competing differently using a set of actions to perform better over rivals and achieve greater profitability. It is about choosing to be different and making the correct choices to provide direction and guidance to employees and the company on what to do and what not to do.
For example, JC Penney has been in the retailing industry for many years (this is a strength) and this allows them to understand the sudden changes the industry undergoes through and it allows them to be prepared when problems arise. New companies might not understand or prepare themselves for future problems like JC Penney does due to the lack of years they have been part of this industry. The organizational strategy is an appropriate match for the organization’s environment because it allows JC Penney to review the things they are struggling with and weaknesses. It also helps JC Penney understand their strengths and opportunities and how to use them in their favor.
Porter (1997) suggests in order to gain competitive advantages in the changing business environment, it is essential to design a generic strategy for the business: product differentiation or cost leadership. The competitive strategy is determined at round 2, when recognised our rivals held whole product profile which was the product differentiation strategy. To differentiate our strategy from rivals for competitive advantages, Digby designed to imply the cost
To formulate a strategy, one must understand what a corporate strategy is. According to Hitt, Ireland, & Hoskisson (2013, p.164) “a corporate strategy is a specific action a firm takes to gain a competitive advantage. Corporate level strategies help companies to select new strategy positions”.
Arthur, A., Thompson, Margaret, A., Peteraf, John, E. Gamble, A., J., Strickland III. (2014). Crafting & Executing Strategy: The Quest for Competitive Advantage 19e: Concepts & Cases. C6-C25.
In this essay, I will select an organization that I am familiar with and identify and analyze one of the competitive tactics it uses to determine when and where their strategy should be implemented. I will then consider its internal and external environment using either the SWOT, 5 Forces, or PEST strategic management tools in the course. Finally, I will then develop a new idea for a competitive tactic that it should attempt.
Competitive strategy is a long-term action plan that is devised to help a company gains the competitive advantages over its competitors. There are Four Porter’s Competitive Strategy which including cost leadership, differentiation, cost-focused and focused-differentiation.
The strategic recommendations provided will improve and enable the business to cope with the competitors, while the implementation of the strategy section will outline the way to go about achieving these alternatives in the business setting. Lastly, we put up a discussion on the evaluation procedures and necessary controls for the business. In the case study, it was discovered that there were sources of opportunities in which the company would invest.
Narrow focus on limited value chain activities, competitor’s pricing war and lack of differentiation parity can erode the competitive advantage associated with cost leadership strategy. Similarly, imitation of differentiating features by competition and lack of perceived value of the differentiating features can erode the competitive advantage associated with differentiation strategy.
Numerous definitions of strategy exist, in most circumstances strategy can loosely be explained as an overall plan of deployment of resources to ascertain a favourable position within a market (Zablah, Bellenger and Johnston 2004; Grant 1994, p 14). Further, imbedded in many successful organisations are strategies, the importance of which is to remain relevant in the market, and successful in the various attributes of business; profiteering, employee motivation, maintaining sustainable core competencies, effectiveness in operation, or efficiency in the conduction of operations. Therefore challenges involved in the formulation and implementation of a strategy can revolve around the overall external market, as well as internal
Business level strategies identify the company’s overall competitive theme (Hill & Jones, 2013). In addition, business level strategies evaluate the ways a company creates its competitive advantage and the various positioning strategies that are used in a numerous of industry settings. Companies may use a cost leadership strategy, differentiation strategy, focus strategy, or a combination of these: Cost leadership is a company’s use of effectiveness in order to sell their products at the lowest price than its competitors. Differentiation strategy is the creation of desired products or services. Focus strategy is when a company offers specific services in a niche market. Focus strategies put emphasis on a precise role or division of the industry.
Strategy formulation is the process of establishing the firm's mission, goals, and choosing among alternative strategies or plans; it involves and implies that preparing the best approach to respond to the circumstances of a firm's environment, whether or not its conditions are known in advance; being strategic and tactical, then, means being clear about the management's aims; being aware of the company's resources, and incorporating both into being consciously responsive to a dynamic environment (SM, 2010). As nearly all businesses have limited resources, top leaders and management must determine which alternative plans or strategies will do well to the organization most; strategic management requires attention to the big picture and the motivation to adapt to circumstances, and consists of the following aspects:
A successful business strategy will identify changes in the external trends in the market place. Plan out what the company’s future direction is. Set out the goals for the management team. It will identify a vision of where the company wants to be in the future. Keep all employees informed of the direction of the company.
That reminded me from the case study the director how to plays round of the company to succeed this Colombian Memorial Hospital. External control view of leadership, situations in which external forces where the leader has limited influence determine the organization 's success. Strategy, the ideas, decisions, and actions that enable a firm to succeed. competitive advantage firm 's resources and capabilities that enable it to overcome the competitive forces in its industries. Operational effectiveness, Performing similar activities better than rivals. Intend strategy, strategy in which organizational decisions are determined only by analysis. Realize strategy, strategy in which organizational decisions are determined by both analysis and unforeseen environmental developments, unanticipated resource limitations, and changes from managerial preferences. Strategy analysis studies of firms ' external and internal environments, and there with organizational vision and goals. Strategy formulation, decisions made by firms regarding investments, commitments, and other aspects of operations that create and sustain competitive advantage.
Competitive strategy is the approach that an organisation takes in order to gain advantage over its competitors. According to Porter, there are two major sources of competitive advantages: costs and differentiation. Cost-based competitive advantage involves reducing production costs so that an organisation can earn higher profit margin or offer products at lower price compared to competitors. Differentiation-based competitive advantage involves offering unique properties that are not offered by competitors’ products. Differentiation allows an organisation to charge a premium for their products because they offer additional benefits to buyers.