Competitive strategy addresses four fundamental business questions: Where do we play? How can we win? What are the required resources and capabilities?
business
Description
1.1 Model
Competitive strategy
addresses four fundamental business questions: Where do we play? How can we
win? What are the required resources and capabilities? When shall we change?
Each question respectively deals with the following set of choices: industry
structure, target markets, unique customer value, rivalry, & key success
factors; competitive advantage, distinctive value chain, internal fits,
strategic fits & strategic position; resources portfolio and complementors;
and sustainability & strategic change. The essence of competitive strategy
is about performing the right set of activities to serve the right target
markets. The purpose of competitive
strategy is to alter or create a firm’s competitive strengths to gain a
sustainable edge over its competitors (Ohmae, 1982). Thus, I define
competitive strategy as a
set of interdependent choices that allows a firm to create a sustainable
competitive advantage and superior customer value in a product market. The model shows how the choices are
coordinated and integrated.
1 COMPETITIVE STRATEGY DEVELOPMENT MAP
1.1 Model
Strategy development
requires external and internal analysis. The essence of strategy is to find the
best match between a firm’s internal and external environments. The map shows
the relationships and core concepts of the internal analysis, strategic fits
and external analysis. The core concepts of the internal analysis include
resource portfolio, complementors, distinctive value chain, activity system,
internal fits and competitive advantage. The core concepts of external analysis
include industry structure, target markets, unique customer value, rivalry and
key success factors. The core concepts of the match between the external and
internal analysis include strategic fits, strategic position, sustainability
and strategic change. Collectively, these core concepts answer four fundamental
business questions: Where do we play? How can we win? What are the required
resources and capabilities? When shall we change? When developing competitive
strategies, executives must also consider contextual factors such as mission
statements, firm performance and strategy execution. The strategy map shows how
these integrated core concepts or choices constitute a firm’s competitive
strategy.
