Distinguish Between Competitive and Corporate Strategy
Mariam Peyton is a professional Financial Analyst. She holds a Masters degree in Economics. She specialises in financial analysis and forecasting. Her expertise includes studying the financial performance of companies, markets and entire industries looking for trends, insights and information that can help you glean rich insights for use in academic and market research.
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In this assignment, I will explain the difference between competitive and corporate strategy, and why they are both important for business success. Competitive strategy and corporate strategy are two different concepts that relate to how a business positions itself in the market and pursues its goals.
Competitive strategy is the process of identifying and implementing actions that create and sustain a competitive advantage in a given market. A competitive advantage is the ability to deliver superior value to customers, relative to the competitors, and to earn above-average profits. Competitive strategy involves analyzing the industry structure, the strengths, and weaknesses of the competitors, the opportunities and threats in the environment, and the resources and capabilities of the firm. Based on this analysis, a firm can choose one of three generic strategies: cost leadership, differentiation, or focus. Cost leadership means offering the lowest price in the industry while maintaining acceptable quality and service levels. Differentiation means offering unique features or benefits that customers value, and that are not easily imitated by competitors. Focus means targeting a specific segment of the market, and serving it better than anyone else. A firm can also pursue a combination of these strategies, as long as it does not get stuck in the middle, where it fails to achieve any competitive advantage.
Corporate strategy is the process of defining and implementing the goals and objectives of an organization. It involves analyzing the external and internal environment, identifying the strengths, weaknesses, opportunities, and threats, and formulating a vision, mission, and values. Corporate strategy also entails developing and executing action plans, allocating resources, monitoring performance, and evaluating results. Corporate strategy is essential for ensuring the long-term success and sustainability of an organization in a competitive and dynamic market.
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Distinguish Between Competitive and Corporate Strategy A Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Understand the concepts of Competitive strategy and Corporate Strategy
- Understand the similarities and differences between the two
- Apply these strategies to real-life organizations
1.0 INTRODUCTION
Competitive strategy is about how a firm competes in a specific market or industry, while corporate strategy is about how a firm manages its portfolio of businesses and resources across different markets or industries.
Competitive strategy focuses on creating and sustaining a competitive advantage over rivals, by offering superior value to customers, reducing costs, or both. Competitive strategy can be based on differentiation, cost leadership, or focus. Differentiation means offering products or services that are unique or distinctive from competitors, and that appeal to a specific segment of customers. Cost leadership means achieving the lowest cost of production or delivery in the industry, and passing on the savings to customers. Focus means concentrating on a narrow market segment or niche, and serving it better than anyone else.
Corporate strategy, on the other hand, deals with the overall scope and direction of the firm, and how it creates value across its various businesses. Corporate strategy involves decisions such as which markets or industries to enter or exit, how to allocate resources among different businesses, how to leverage synergies or economies of scale across businesses, and how to manage the relationships between businesses.
Corporate strategy can be based on diversification, vertical integration, horizontal integration, or portfolio management. Diversification means entering new markets or industries that are different from the core business, in order to reduce risk or exploit opportunities. Vertical integration means acquiring or controlling the suppliers or distributors of the core business, in order to increase efficiency or quality.
Horizontal integration means acquiring or merging with competitors in the same industry, in order to increase market share or bargaining power. Portfolio management means managing a collection of businesses as a portfolio of investments and allocating resources based on their performance and potential.
Both competitive and corporate strategies are essential for achieving long-term profitability and growth. A firm needs to have a clear and coherent competitive strategy for each of its businesses, in order to gain and maintain a strong position in its target markets. A firm also needs to have a sound and consistent corporate strategy for its entire portfolio of businesses, in order to maximize the overall value of the firm and its shareholders.
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