A business is dependent on how its strategies are set for implementation. Implementation of the strategy is inevitable in any organization as, without this process, the business cannot head further in its operations towards attaining organizational objectives. These strategies are crucial for business management and impact the industry’s performance. Subsequently, this article studies the relationship between the implications of business strategies on creating a competitive advantage in the organization. It also includes the different strategies that an organization can adopt to gain a competitive advantage.
Competition is considered petrifying by certain individuals, but the same terminology can be presumed as an opportunity for others. It depends on how they perceive the competition facing them. It is indispensable for a business person to neglect competition in this hustling world. The competitive business advantage is a quality possessed by any business to outperform its competitors. This can be understood more clearly by standing out in a crowded market so that you have a special appearance from an aerial outlook. Standing out is more fundamental than an outstanding performance in a business. Creating or constructing something that your competitors would never envisage needs to be embraced to have an upper edge. This very process is referred to as innovating. Some basic examples of competitive advantages are firsthand resources, highly experienced personnel, distinctive location, access to novel technology, the ability to manufacture products at the lowest cost, company goodwill, etc.
The competitive advantage is supposed to be incomparable and inimitable. It aids the businesses in having an internal glance at their existing strategies and identifying them. It is considered futile if any business organization straightforwardly imitates the competitive advantages. Therefore, identifying target customers is a crucial step in implementing the strategy. Thus, the infusion of a new strategy to conquer the standards of the target customers must be carried out. Specific aspects that need to keep in mind for the strategy implementation for competitive business advantage are as follows:
- Analyzing the competitors.
- Identifying their strategies.
- Anticipating the potential market.
- Conceiving exceptional ideas.
- Implementing those ideas.
The above diagram represents the hierarchical representation of how to reach the topmost level of the market. Business strategies serve as the base for this procedure. It is essential to identify the most suitable strategy for the business and analyze all the potential competitors in the market. Consequently, grappling with all the possible advantages which would allow the company to gain its consumers’ confidence in the company will lead to the final stage of attaining the top level in the market. The whole procedure does not terminate here; sustaining the position becomes vital as it does not take much time to get back to where it all started. Therefore, constant control at all stages is required to retain the position.
Basic strategies that need to be implemented are as follows:
- Cost-Effectiveness: Cost-effectiveness means utilizing a company’s financial resources so that it results in the best equilibrium of maximum quality, speed, and throughput. It involves producing the same product/service at lower prices than your competition without degrading the quality of the product/service. Generally, customers tend to buy from a place where its costs are cheap compared to other places. Why should you pay extra when you can purchase the same thing with similar quality at a lower price? This kind of mindset is intended in consumers’ minds. Hence, a price-cutting strategy is crucial in today’s world to stay in the rat race; else, the business could get bankrupt in the blink of an eye.Cost is considered the leader in competition as every business is managed on the sole basis of this factor. It acts as a valuable strategy, especially when the cost is viewed as a competitive advantage. The main objective of this strategy is efficiency and reduction of operating costs. If the companies have to pay a little extra for the optimum utilization of resources and effectiveness, that should be considered. For example, McDonald’s main competitive advantage relies on cost-effectiveness. The company can achieve economies of scale, manufacture products at low cost, and, therefore, offer lower prices than its rivals. This example implies that cutting costs for the company’s benefit is an effective strategy for competitive business advantage. McDonald’s has been able to attain a sustainable position without many competitors in the marketplace.
- Thinking Outside the Box: While the exclusive businesses stay in the market, the rest are washed out. It becomes decisive to attain something your competitor does not already possess or may acquire in the near future to remain in the market. Typically, every business tries to maintain its sales and profits and hence does not agree to go in different directions. But innovation in some form is necessary to drastically increase sales and profit. As this involves risks and threats, many companies are reluctant to utilize this strategy. Nevertheless, to have the upper hand in the market necessitates coming up with extraordinary ideas for the business. Some news channels do not share pictures or videos of the victims of an incident as they think it might harm people. It is genuinely a moral strategy to not showcase the negative aspect of an incident and grab viewers’ attention towards its channel. To reinforce dominant strategies and position oneself on higher standards, thinking against the grain of common philosophies becomes a prerequisite. For example, let’s take TESLA, a luxury car and tech company. In a sense, they currently have no direct rivalry. However, Tesla has positioned itself so well that the company will undoubtedly maintain its competitive edge when direct competitors emerge.
- Loyal Customer Service: Around 75% of customers state that they consider customer service an accurate assessment of a company’s competence. Renowned companies with excellent customer service include Amazon and Hyundai. But even insignificant companies seem to be doing much better in this area, as they have discovered the loyalty-generating power of excellent customer support. Customer service plays a significant role in creating competitive business advantage. In India, Customers are treated like kings, so it is the fundamental obligation of businessmen to scrutinize a customer’s requirements prudently. “Satisfied with the product/service, tell others; if not, tell us,” this must be the motto of all businessmen. A wise businessman understands and analyses the mind of a customer. 84% of Americans write reviews online before deciding to buy. If your customer service strategy doesn’t include review management, you could lose your customers to the competition before they’ve even had a chance to try your product or service. According to a 2017 Talend survey, 57% of respondents cited “negative unprocessed reviews” as the main reason for their “break” with a brand. If you cannot provide perfect customer service in person, you should resolve the issue by responding to negative customer reviews. Tracking and responding to negative and positive reviews is essential for customer retention. Studies show that customers are 14% more likely to return to a business that has reacted to their reviews. As Forbes points out, L’Oreal targets its most expensive hair care products in marketing with the slogan “because you’re worth it.” This strategy contributes a sense of belongingness and prominence to the customer, and they feel included in the company. Precisely, companies head further in the market due to their loyal customers. Even if their prices increase, their trust and goodwill in the company make them stand by the company forever.
- Combined Strategy: As the name suggests, this strategy combines two or more strategies for competitive business advantage simultaneously. Depending upon the selected competitive advantage, companies can derive a solution for deciding the strategies to be chosen for the business operations For example, Louis Vuitton can dominate the luxury market and obtain superior prices through the uniqueness of its products. Louis Vuitton has put in place a combined strategy to reach such a level in the market. Apple Inc. has a high capital volume to research and develops new products. While they don’t launch products in the same volume as some of their competitors, the products they create are carefully designed to deliver the best value and the best customer experience. This effective use of the combined strategy allowed them to sell their products at a higher price than their competitors without sacrificing market share or gross margins.
To sum up, this article emphasizes the influence of business strategy’s role in creating an organization’s competitive advantage. Business strategy plays a vital role in attaining the organizational objectives of an organization. The world of business is dynamic, and to remain in the market, it becomes mandatory to implement suitable strategies for the business. Strategy is considered the “highest point of managerial activity”(Mintzberg). Accordingly, it becomes indispensable to ignore implementing novel strategies from time to time thoroughly. Companies need to recognize and avoid old-school strategies and adopt fresh and better ideas for the business.