Strategic Management

Strategic Management

Factors to Consider for the competitive advantage

The global business environment of today abounds with cut-throat competition. This means that the businesses operating in the global market have to be more clever and innovative in how they devise strategies. As always, the need to gain a competitive edge and maintain a wide competitive moat in a highly competitive businesses environment is an essential prerequisite to success and profitability. There are several ways in which businesses can widen their competitive moat in order to gain a competitive advantage in the industry. The following are just a few of them:

Resource planning

A lot can be determined about the future success of a company by the way it plans its resources. There are a myriad of resources that the businesses must manage in order to ensure the successful operations of a business (Sadler & Craig, 2003). A business can gain a competitive advantage through clever and more efficient utilization of its resources so that there is minimum wastage or under-utilization of resources. In order to do this, business strategists and planners need to devise extensive strategies that can effectively determine the full potential of the resources that have been employed by the business. Once this has been done, the employees and other resources of the business can be directed to perform at their full potential in order to increase the productive capacity of the business (Sadler & Craig, 2003). This would lead to a higher output per unit of production, eventually resulting in higher productivity as compared to industry standards.

Product portfolio

The success or failure of a company is heavily dependent on the products and services that it offers to the consumers in the target market (Sadler & Craig, 2003). For example, a company that sells high-quality products to the consumers would ideally secure a huge market share. However, this is not always the case since the market also comprises of consumers who are highly price sensitive so that they would easily settle for a cheaper product that fits their price range while also offering the best value for money. Therefore, it is imperative that businesses have a diversified product portfolio in order to gain a competitive edge in the market (Sadler & Craig, 2003). A diversified product portfolio consists of a wide range of products that are specifically designed to target various segments of a target market that are typically divided according to demographics, and consumer age or income range . By developing a wide range of products that appeal to consumers of different income bands or age group, a business can make sure that it maintains a wide competitive moat in a highly competitive business environment. Another benefit of using a diversified portfolio is its association with risk. It is understandable that businesses that have a diversified product portfolio are in a better position to leverage risk in a highly volatile market since they are generating income through several products rather than just one or two (Amason, ...