Monday 17 November 2014
Competitive
Strategy:
Long term plans that a company made to have competitive edge
upon his rivalry. It is essential for saturated companies having substitute of
the products. For example, it is used in heavy advertisement.
There are 5 kinds of competitive strategies:
- Cost Leadership
- Differentiation
- Innovation
- Growth
- Alliance
1) Cost Leadership:
That company will be entitled to be called cost leadership, who can
provide:
·
Suppliers and customers to reduce their prices
·
Becoming low cost producer of products and
services as compared to their competitors
·
Increment in cost of competitors
Example:
Ebay is famous
online website, who provides its customers products with the help of online
payment process also. They get competitive strategy by online ordering facility
and verified payment process upon other web sites like OLX.
Business will
have benefit having lowest cost producer and lowest possible prices. As Fixed
cost per unit decreases in long run.
· A firm with its different product
lines and product mixes will have a great impact upon its sale. Customer is
satisfied with the brand having different kinds of products.
· New firm has to compete up to
reducing competitive advantage minimum. It means, old firms will be providing
different products and services to its consumers, and then new firm has to provide
these products and services just to survive in market.
Example:
If a manufacturing company is
producing cars basically, but they install a plant of manufacturing of
motorcycles also then a new firm has to produce cars and bikes just to compete
and survive in market, then next stage will be of better quality and competitive
advantages.
Business
will have benefit by increase in market share of the company.
3) Innovation:
·
Next
stage after differentiation is INNOVATION. It is development of unique products
and providing new services.
·
Entry
in new market and in market niche is also in meanings of innovations.
·
Introducing
new and radical changes in the operation process or marketing field of the
organization is in meanings of the innovation strategy also.
Example:
Like
in CNG sector, if an organization introduce the free service of washing the
wind screen of every car coming into their CNG filling station and presentation
of glass of water at the spot, it will surely attract the customer. It is a
unique service that will surely have impact on sale and reputation of the
organization. It will lead to market leadership.
Business
will have benefit by market leadership.
·
It
means to expand company’s capacity of production of goods and provision of
sales.
·
Entering
into new market, especially into global market is in it.
·
Diversification:
It means company start working in new project with running its old ones also.
·
Integration:
Provision of similar goods to the consumers for their facilitation.
Example:
Citicorp
is organization having existence in globally intranet which facilitates its
consumer by ordering global satellite network.
·
Making
new business alliances and linkages with different
suppliers,competitors,consultants and other companies.
·
It
may be of many types, in which both parent companies may exist or may
eliminate.
Example:
Just
like alliance of the Wal-mart/Procter & Gamble, that provides facility of
online one stop shopping area. It gives benefit to the business as reduction in
inventory cost and increase in market share.
Another
example will be of ‘’ Sony-Ericson ‘’, in which cellular technology is shared
by Ericson and electrical technology is shared by Sony.
