DEFINE YOUR COMPETITIVE STRATEGY

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HOW TO DEFINE YOUR COMPETITIVE STRATEGY?

Competitive strategy is your company's ability to be competitive in your sector, i.e. to compete with other companies for the same customer. The competitiveness is the ability you must achieve to compete with the other companies where your customer's needs can be met. The first fundamental step, before identifying your strategy, is to be clear about the comparative advantage you want to achieve for your new company. Once you have identified your competitive advantage (+) In the long term, the strategy is the path you must follow to get there. Without a clear strategy, it is very easy to fall into the sack of the zombie companies (+).

There are three generic strategies: differentiation, cost leader o specialisation

• STRATEGY FOR DIFFERENTIATION (+).

Interesting if you want to target a segment of customers who are looking for product features that are different from those offered by your competitors' brands. That is, when you can offer a plus, or an activity with a unique added value. This strategy is often based on making your customer perceive that they are looking for a unique product or service - in the purest lovemark style.

For example: a sophisticated and secure service or an exclusive design.

This strategy may be appropriate when your customer segment is less price sensitive and more loyal.

• STRATEGIES FOR COST LEADER (+)

An attractive option for companies that are able to offer a product on the market at a lower price than the competition thanks to production at the lowest possible costs.

• TARGETING OR HIGH SEGMENTATION STRATEGIES SPECIALISATION OR NICHE (+).

This consists of specialising in a very specific segment of the market by offering the best product for the needs of that type of customer. Depending on the objectives, the company may also apply a competitive strategy of segmented differentiation or cost leadership.

"If the customer cannot differentiate you in the superior or specialised service or product, you will have to be the cheapest".

You can only adopt one of the three strategies; all three are incompatible. See what is meant by a differentiated product or service (see+). A typical mistake is to think that you can offer customers in your sector the best quality at the lowest price... this is unsustainable! In consolidated companies, we speak of corporate strategy as a set of actions to be carried out by the company in order to maintain their competitive advantage in the long term.

MAINTAINING COMPETITIVE ADVANTAGE IN THE LONG TERM:

• Diversification risks or focus (+).
• Barriers to entry.
• Exit barriers.
• How to Create a Strategy.
• Vision and Mission.
• SWOT analysis (+) enter your strengths where the environment offers you an opportunity or where your competitors leave a gap to differentiate you.
• Porter Force Analysis. The analysis of the Porter's 5 forces (+) can help you find your strategy

YOU CAN ALSO LOOK FOR WAYS TO AVOID HAVING TO COMPETE:

• Strategies for Blue Ocean (+).

Companies that do not define a strategy run the risk of being ZOMBIES or failing. Having a defined strategy is necessary to finish designing your business model, or your business plan, correctly.

There are a number of strategies that a new company can choose to compete well in its market:

SOME OF THE MOST COMMON STRATEGIES ARE

1. Cost leadership (+): The company seeks to offer the lowest possible price for its products or services in order to attract price-sensitive customers.
2. Differentiation (+): The company seeks to set its products or services apart from the competition in some way by offering something unique and valuable to customers.
3. Specialisation (+): The company focuses on a specific niche market, offering products or services that meet the needs of a particular group of customers.
4. Towing strategy (+): The company follows the strategies of leading competitors, hoping to take advantage of their R&D and marketing investments to offer similar products or services at a lower price.
5. Diversification strategy (+): The company seeks to expand its product or service portfolio to serve multiple market segments.
6. Growth strategy: The company seeks to grow and expand rapidly, either by acquiring other companies or by penetrating new markets.
7. Niche strategy: The company focuses on a very specific market segment, where competition is low and it can offer specialised products or services.
8. Marketing strategy: The company focuses on the promotion and advertising of its products or services to attract new customers.
9. Brand strategy: The company seeks to build a strong and recognised brand, to differentiate itself from the competition.
10. Defensive: The company is prepared to face threats. If your product is no longer considered a leader, highlight what differentiates you from the competition. When market share declines, look for more profitable customers and protect them.
11. Offensive: The company should adopt growth strategies. When your strengths are recognised by customers, you can attack the competition in order to exalt your advantages (e.g. the 83% prefers x ). When the market is mature, you can try to steal customers by launching new models.
12. Survival: You face external threats without the internal forces needed to fight the competition. Leave things as they are until changes take hold (e.g. observe the internetisation of the environment before going online).
13. Reorientation. Opportunities open up that you can take advantage of, but you lack the right preparation. Change policies or products because the current ones are not delivering the desired results.

It is important for a new enterprise to choose a strategy that suits its objectives, resources and competencies, and that fits the needs of the market it is trying to serve.

Advice to an entrepreneur on choosing the right competitive strategy for his new venture

Choosing the right competitive strategy is an important decision for any entrepreneur.

HERE ARE SOME TIPS TO HELP YOU MAKE THE BEST DECISION:

1. Know your competition: Before deciding on a strategy, make sure you know your competitors well. Research their strengths and weaknesses, and try to identify opportunities that you can exploit.
2. Know your customers: It is also important to know your customers, their needs and desires. This will help you to tailor your offer to meet their needs and differentiate yourself from the competition.
3. Analyse your resources: Be realistic about the resources you have available and how you can use them effectively. Consider your strengths and weaknesses, as well as the financial, technological and human resources at your disposal.
4. Set clear objectives: Clearly define your company's objectives and make sure that the strategy you choose will help you achieve them.
5. Don't focus on a single strategy: Don't limit yourself to a single strategy. Instead, consider combining several strategies to achieve a sustainable competitive advantage.
6. Stay flexible: Market and industry conditions are constantly changing, so it is important to remain flexible and be willing to adjust your strategy accordingly.

By following this advice, entrepreneurs can make more informed decisions about the most appropriate competitive strategy for their new venture.

Risks of a new company not having a well-defined competitive strategy

Having a well-defined competitive strategy is crucial for the success of a new venture. If a company does not have a clear strategy, it may face several risks, such as the following.

RISKS:

1. Losing competitive advantage: If a company does not have a well-defined competitive strategy, it may not be able to distinguish itself from its competitors. As a result, it may lose its competitive advantage.
2. Lost opportunities: A company that does not have a clear strategy may miss important market opportunities. The focus may be lost, and the time and resources invested in different initiatives may not lead to the desired results.
3. Difficulty in making decisions: the lack of a clear strategy can make decision-making difficult. If the company does not have a clear plan of action, it can be difficult to know what decisions to make and how they will affect the business.
4. Blur: Without a clear strategy, a company can lose focus and direction. It may not know where to concentrate its efforts and resources to maximise its potential.

In short, having a well-defined competitive strategy is crucial to the success of a new venture. If a company does not have a clear strategy, it may face significant risks that can affect its ability to grow and prosper. A company that is "in between two waters" generally refers to a company that does not have a clear and defined strategy. They may be trying to do everything and satisfy everyone, without focusing on a concrete strategy. As a result, may not be maximising their potential and could be missing valuable opportunities. By not having a defined strategy, the company risks losing its focus, and resources are wasted on conflicting objectives instead of focusing on key growth areas.