All businesses must make a strategic decision to focus on one primary driving force that is their means to sustainable competitive advantage. Driving force falls into 6 different categories:
Technology: These organizations are built around innovation and/or a set of capabilities that enable it to develop new technologies or enhance existing ones. Key capabilities are R&D, market research and new product/service introduction. Competitive advantage stems from the ability to innovate on a consistent basis. Examples include: Microsoft, Apple, 3M, pharmaceutical companies.
Production Capability or Cost Advantage: These organizations build their success on producing and delivering goods / services cheaper or more efficiently than competitors. Key capabilities are related to operational excellence, production skills, and investment in equipment and automation. They compete primarily on the basis of price, and this drives everything else. Examples include: contract manufacturers, consumer goods makers with little product differentiation (e.g. soap, basic foodstuffs like sugar and milk), and some retailers (Walmart).
Products/Services Offered: These organizations meet a basic and enduring need in the marketplace by offering best in sector products or services. They seek to penetrate current demographic, geographic, or industrial markets as fully as possible before pursuing growth through the extension of markets or the creation of entirely new ones. Their main competitive advantage is the inherent value built into their products or services and the resulting brand equity. Examples include: automobile makers, consumer products companies, and training firms.
Method of Distribution: These organizations select their products or services, customers, and geographic scope on the basis of distribution channels. These are companies or organizations that are driven by the needs of their operating networks. You know you are dealing with a distribution or network driven company when you have to adapt to them, rather than they adapting to you. Examples include: telecoms, cable companies, the post office, utilities, and courier services.
Method of Sale: These organizations compete primarily on the method of sale. They market and sell effectively leveraging systematic and highly developed sales methods. Their core competency is the proficiency in which they attract, connect and transact with their customer base. All other capabilities, particularly method of distribution, will be developed to support this method. Their key competitive advantage is the convenience and choice they provide to buyers. Examples include: catalogue retailers, Amazon, Avon, eBay, and the iTunes Store.
Markets/Needs Served: These organizations seek to offer a range of products or services to a limited market or segment. They build a powerful relationship with a clearly defined and often narrow group of customers or consumers who have common characteristics (niche). They pursue growth and new business by offering an increasing number of products and services to their chosen segments. Their competitive advantage is built on the strength of their relationships and their brand. Examples include: Disney (kids’ entertainment), Gillette (men’s toiletries), TV and financial services.
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