Strategic Marketing Management
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Chapter 3 : Business Strategy and Competitive Advantage
Organizational Change
Business Strategy
Organizational Restructuring
Competitive Advantage
Obtaining Competitive Advantage
Analysis of Competitive Position
Developing a Sustainable Competitive Advantage
Market Entry Barriers
Business Strategy
Corporate Mission
Core Competence
Corporate Development Alternatives
Composition of a Business
Strategy Analysis and Choice
Strategic Analysis in an SBU
Chapter Summary
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Structure and strategy are inter-dependent. Once the marketing strategies and
plans are formulated, the top management has to focus on developing a
supportive organizational structure. A business strategy is the action plan
for achieving the objective of the business. However, globalization has
resulted in increased competition and has thrown open many markets. While
this has led to increased opportunities, it has also resulted in immense
competition. The global market environment requires an organizational
structure, which is unlike the traditional hierarchical structure that has
many layers and redundant positions. The new organizational structure should
focus on the requirements of the customer and the changes in the market
environment. The structure of the organization should be in harmony with the
business strategy. While restructuring an organization, the top management
must focus on disaggregation, internal restructuring, and the forming of
networks.
Competitive advantage helps a business to gain market share and
profitability. A business can gain a competitive advantage by providing
superior value or lowering the relative costs. |
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The components for obtaining competitive advantage are bases of competitive
advantage, the advantageous position, and the results. The bases of
competitive advantage are enhanced resources, improved skills, and better
controls. The advantageous position can be attained by providing superior
value to the customers or by lowering costs. The results of competitive
advantage are generally measured in terms of profitability or market share.
The competitive position of a company can be measured using
competitor-centered methods or customer-centered methods. Rather than depend
too much on either of these methods, a business should make use of both,
depending on the situation. After achieving a competitive advantage, a
business must make efforts to sustain it. The company should develop
advantages that cannot be easily imitated. Competitive advantage can be
sustained in three major areas namely, size in the target market,
accessibility, and the market entry barriers.
The strategy should define the mission statement, core competence, and the
corporate objectives. The mission statement should define the purpose of the
business and what business one is in. It should be different from the
mission statement of the competitors and should also provide a competitive
advantage. The core competence is the one thing that a company can do better
than others. The competitive advantage of a company is built around one of
its core competencies. Core competence is the root of competitive advantage.
The process of obtaining core competence involves defining the needs of the
customer, preparing a plan for the product, developing a prototype,
manufacturing, distributing/selling and providing after-sales service. The
corporate objectives act as a yardstick to measure the performance of a
business. These objectives can be in terms of gaining market share, making
profits, etc. A company can plan to expand its business either by
introducing new products in existing markets or existing products in new
markets or by diversifying. It is easier for a company to formulate a
business strategy if the composition of a business is well defined. A
company can be divided into business units based on the industry in which it
operates. However, the business units work together to achieve the strategic
vision of the company.
The strategic choices play a vital role in the performance of a business.
The generic strategies formulated by Herbert and Deresky will help a
business in making strategic choices. These generic strategies include the
develop strategy, the stabilize strategy, the turnaround strategy, and the
harvest strategy. The capabilities approach and the comparative advantage
theory also help a business in making strategic choices.
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Short Case Studies / Caselets