Essay - Competitive Strategy in a Free Economy, a Multitude of Firms...

Competitive Strategy

In a free economy, ***** multitude of firms compete for the business of the same customer segment. Therefore, if a firm is to succeed in attracting and retaining the maximum number of customers from the targeted segment, it must develop and successfully execute a strategy that has a d*****tinct competitive advantage over its rivals. Thus, a ***** strategy is defined as a plan that attempts to define a position for the business, which utilizes the competitive *****dvantages that the ***** has ***** its competitors (American Marketing Association, 2004).

Of course, it is important ***** any ***** strategy to focus on competitive advantages, which can *****fer customers greater value, either by means of lower prices or by providing a gre*****ter benefit or service ***** justifies a higher price. In other words, it is key that a competitive strategy ***** c*****sumer centric. Developing a competitive str*****tegy, therefore, involves closely analyzing the competitive forces within an industry and/or business segment, based on which it would then be possible to determine the type of ***** strategy that a firm m*****y ***** in a position to follow. ***** fact, this is the method followed ***** Michael Porter, who ***** on h***** work analyz*****g t*****e competitive forces within an *****, suggested four generic business strategies that could be adopted to gain competitive advantage. The four forms ***** competitive ***** are: differentiation leadership; cost leadership; differentiation focus; and cost focus. The leadership strategies are designed to seek competitive advantage in a broad industry, while the focus strategies are more appropriate for narrow industries and market segments (tutor2u, *****).

*****, if a ***** is oper*****ting in a broad *****dustry or market segment, it can choose to build a competitive ***** by differenti*****ting its product ***** service in a manner that fulfills buyer criteria far *****tter than competition. If ***** business is successful in doing this, it will also be in a pos*****ion to charge its customers a premium price, ***** is justified by superior per*****mance or the extra ***** added features. This point is well illustrated by the example of Mercedes cars, a brand ***** has continuously been able to adopt a stance ***** "differentiation leadership," and *****reby command a premium in a ***** industry. *****, on the other hand, a firm is operating in an industry where it is difficult ***** credibly differentiate a product or *****, the better strategic option lies in adopt*****g a ***** ***** position (*****, 2004). In f*****ct, in today's increasingly competitive global *****, cost leadership *****d focus ***** seen as equally, if not more key, than d*****ferentiation especially since the latter is becoming harder to achieve. This is evident in examples such as the now famous Dell Computers business model.

Focus ***** are used to build competitive ***** when businesses operate in a ***** narrow industry or market *****. Here, a business has a choice between aiming to ***** its product or service ***** just one or a sm*****ll number of segments (if it is confident of fulfilling special customer