Streamlining your business

Competitive advantage: it's not hard if you think strategically

Well-executed strategic planning helps drive profitability, business expansion and the ability to excel against your competitors. 

No matter what size your business is, or in what industry or sector your business sits, you need to establish a competitive strategy, particularly if your objective is to penetrate competitive markets and succeed. 

Creating a strategic plan

One of the most challenging issues for businesses is the desire to try and do everything at once. This is just not possible, so it’s critical to focus on the most important short-term and long-term objectives of your company – and ensure you have a strategic plan in place to meet those objectives.

Michael Porter, the creator of the Competitive Advantage Model, determined a company should adopt a strategy that is intended to achieve some form of competitive advantage for the company’s sustainability. 

Porter believed there are three generic strategies for competitive advantage: cost leadership, differentiation and focus. 

Regardless of your business size or industry, you need to establish a competitive strategy to achieve the advantage or edge over your competitors and not aim to be everything to everyone.

Defining your competitive advantage

You can apply some valuable lessons from Porter to your business.

For example, if you are a Cost Leadership organisation, your resources will need to be cheaper and your operations more streamlined to cope with high volume production. Your advertising will need to be fairly intense to emphasise ‘unbeatable prices’ or ‘discounts’.

Alternatively, if you have a focused strategy, your organisation will be specialised and superior with a specific niche, often requiring more expensive resources and focused marketing.

Your organisation must continue to develop its products, markets and manufacturing or operational methods, for it to be sustainable.

This calls for you to make strategic decisions around product, market, manufacturing and service development. 

Once you understand your company’s competitive advantage and product development strategy, you can start implementing the necessary processes to achieve your objectives. Every contributor to the business must be invested in achieving these goals.

Essentially, objective-setting should relate to key factors for business success, such as profitability, market share, growth, cash flow, customer satisfaction or quality of the firm’s products. 

Your business objectives require specific unit objectives, such as increasing your number of customers by 10% or reducing the length of time in producing the product or delivering the service.

Trade-offs between objectives may occur, but once you have decided on the most important or primary objectives, everything else will follow.

Achieving your vision

You’re now in a position to answer some of the harder questions based on your strategic plan. For example, if your organisation has limited resources, consider how these resources will be managed, how will your marketing be managed, and how will you improve your operations. 

Empower your key team members to deliver on the strategies within their areas of control. By empowering your team you are then giving them ownership, which has always proven to be powerful in engaging and delivering success. 

You can now put into place some core key performance indicators (KPIs) that drive the strategies and review these on a regular basis. 

Depending on the size of your organisation, it’s important to closely monitor your strategies on a monthly, bi-monthly or quarterly basis. This enables you to review what is or isn’t working and make adjustments proactively.

Be observant of what the market is doing and ensure your business can be flexible if there are changes.

Hold an annual strategy meeting with your key players. This allows you to shift focus, discuss what has or hasn’t been delivered and why, and to put in place new strategies.

Ultimately, achieving a sustainable competitive advantage takes time and some adjustments along the way – but it will reap long-term benefits in the form of business growth.

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