Category: Competitive Strategy

Competitive Strategy is a plan allowing a company to take a set of coordinated actions that allow it to serve the needs of customers, in a more profitable manner, where the plan either cannot be copied by competitors or requires such a high cost to replicate that competitors choose not to replicate this competitive strategy. There are two levers to pull. First, is the willingness of customers to pay more. Second, is the cost to encourage this willingness. Each of these levers can be analyzed along four dimensions.

Is the service/product valuable?
Is the service/product scarce?
Does the provider have some asymmetry (advantage) in the way it provides the services?
Does it have a cost advantage?

A company is usually deploying some advantage that is allowing it to succeed. This is called a competitive advantage and the competitive strategy is the plan to deploy that advantage. A competitive advantage may be a single asset or skill. A single competitive advantage that may be lost, change or bought over time is not sustainable in the long term. The hardest competitive advantage to copy is one where a company takes a set of average assets and organizes them in way to produce superior returns. This competitive advantage, organizational, is harder to copy and more sustainable.