Strategic Competitiveness, Essay Example

Chapter One – Strategic Management and Strategic Competitiveness

Creating a competitive advantage on a market can create an advanced position of a company on the global market. The global economy creates challenges and opportunities alike. Interdependence among countries can create new markets, as well as new competition. This is the main reason why companies need to create a competitive advantage that cannot be duplicated by other businesses.

Technological changes also call for the development of competitive advantages. They create threats of new entrants (technologies), as well as new opportunities. The best approach to create a competitive advantage is to review the needs of the market and focus on research and development, just like the example of Apple demonstrates.

Knowledge intensity (information, intelligence and expertise) is growing due to technological development. Therefore, observation, experience and information about markets and customers need to be obtained constantly in order to create a competitive advantage for the organization.

The resource-based model of above-average returns is based on uniqueness of products or services. The value of the resource is measured by the level of competitiveness it can create for the firm on the global  market. Strategic actions should be based on determining which projects deliver superior returns.

Strategic decisions’ outcomes can be predicted through profit pools. A strategic leader would take into consideration the interest of the firm, as well as stakeholders and build up a long-term, viable strategy based on strong competitive advantages created through research and development.

External Environment and Competition

The external environment of a business consists of economic, physical, sociocultural, global, technological, political/legal and demographic environments, all impacting the organization’s industry and competitiveness. They interact with each other, and the company needs to create a strategy to gather information on all aspects when creating a business environment analysis.

The general, industry and competitor environments have different segments detailed above. However, without analyzing the environment, it is hard to develop a competitive advantage. The methods of environmental analysis are: scanning, monitoring, forecasting and assessing. This way the leadership is able to determine the impact of each segment of the business environment on the strategy, competitiveness and future outcomes.

Threat of new entrants can also be identified through environment analysis. The company is able to determine whether there are companies in the competitive environment that are planning to extend the operation or if the start-up and research costs would be low enough to attract new entrants. However, the threat of substitute products, the impact of bargaining power also needs to be considered when reviewing the market.

The five forces of competition model can be used within the industry environment analysis process. The management can determine whether there is a rivalry among competing firms, threat of new entrants, bargaining power of suppliers, (affecting production costs) bargaining power of buyers (driving prices down in an overserved market) or a threat of substitute products.

The interpretation of industry analyses needs to be completed on the industry and national level, due to the impact of globalization. Firms with the same market strategies can create strategy groups, based on sharing results, intelligence and consumer insight. It is an effective method for getting an insight into the competitive structure of the industry. This can help the company determine future objectives, review the current strategy, analyze assumptions and capabilities.