Editor's Note: Take a look at our featured best practice, Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]
Competitive Advantage as a Market Share Strategy
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The ability to create and/or utilize an existing Competitive Advantage to target an enhanced market share, in addition to an organization’s inherent internal capabilities, is more often dependent and determined by the scope, growth, and vitality of the market itself (profitability, etc.), as well as the organization’s relative competitive position and its rivalries with competitors within that market/industry. Many other influences exist, with much emphasis upon the bargaining power of buyers and consumers (as we have oft alluded to), suppliers, products using newer technology, etc.
Actual organization performance, however, is primarily dependent upon its competitive advantage within two basic criteria:
- Ultimate cost to bring the product to market; and/or
- The differentiation and “value” of the product, as perceived by the ultimate consumer (including the potential for premium pricing, higher margins, etc.).
The ability for an organization to create or sustain a Competitive Advantage is therefore dependent upon its ability to deliver a “preferred” product to the consumer, or to make it available at a cost which is ultimately profitable enough to allow enhanced market positioning. Every area of an organization will share some responsibility toward ideal market positioning (combined corporate & manufacturing cost, product development, etc). All activities and actions taken within the organization must be closely scrutinized and optimized toward that positive end to achieve Competitive Advantage (operations & manufacturing, R&D, sales & marketing, customer service & relations, distribution channels, partnerships, HR, etc.).
To create a Competitive Advantage, an organization must coordinate all of these areas and disciplines in a way which is superior to the efforts of competitors and preferred by consumers for a potential variety of reasons… therefore, requiring a clear understanding of competitor capabilities & efforts as well.
The relative costs & strategic market approaches of competitors must be thoroughly understood, as well as the specific needs & psychology of the targeted consumer/client & ability of the product to satisfy that need… hopefully, in a preferred and unique way. Overall cost and the perceived value of the product to the consumer is paramount to the positive existence and competitive position of an organization within its market.
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About Anthony GableAnthony Gable, MBA, owner of Echelon Associates, is a Strategic Planning Specialist. He has been advising individual owners, executives, and profit-center (SBU) heads and their teams on the strategic planning process since 1983. Prior to that, he gained management experience from years of wide-reaching exposure in the corporate sector as a manager and executive. You can view his documents on Strategic Planning here.
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