Choosing the best strategies for competitive advantage is a process that should begin with a company assessing its resources to allow it to separate itself from its competition. These resources may come from the quality of the employees, the location of the business, or some sort of innovation within the industry that makes the company better suited to fill the needs of its customer base. Once these resources are identified, businesses should decide between strategies for competitive advantage that stress cost differentiation, and those that emphasize product quality. Companies should also try to decide whether they wish to focus on a broad section of the market or to narrow their focus to a niche market.
Achieving competitive advantage is something that most businesses wish to accomplish. Getting an edge over the other alternatives in the market will likely lead to increased market share, and, in turn, higher profits. Finding out where that edge exists is not a simple task, so companies should choose carefully among the various strategies for competitive advantage available to them.
Businesses should focus on its resources when choosing strategies for competitive advantage; they can help companies gain an edge over its market foes. Long-standing companies may have an edge in terms of brand awareness, since consumers might know them well and be familiar with their standards of service. By contrast, newer companies might be able to get an edge based on leaner operational structures, allowing them to make products that are cheaper than the established brands.
Whatever resources exist, there are two main types of competitive advantage that a company can try to utilize. Cost differentiation is achieved when a company makes products that are suitable alternatives for more expensive counterparts. Companies may also try to separate from their competitors by producing items of higher quality. This might mean that they have to charge a little more, but, ideally, the quality will lead consumers choose their products over inferior, less expensive alternatives.
Strategies for competitive advantage are also dependent upon the market a company is courting. Narrow markets might mean that firms will be looking to find a small niche to which it will cater. Wider markets might require a cost differentiation approach, which can help a firm separate itself from a crowded field. Careful study of the market, in conjunction with efficient utilization of company abilities, can lead firms of all sizes to the competitive advantage they seek.
