In recent years, there
has been marked increase in competition in virtually all areas of business. The
five competitive forces are rivalry of competitors within its industry, for
example, Pizza Hut and Domino’s Pizza, new entrants into an industry or
markets, substitute products that may capture market share, bargaining power of
customers and suppliers. The ability to outperform competitors and produce
above average profits lies in the pursuit and execution of an appropriate
business strategy. (Hsieh and Chen, 2011)
According to Porter
(2008), in cost leadership, a firm sets out to become the low-cost producer in
its industry. The firm has a broad scope and serves many industry segments, and
may even operate in related industries – the firm’s breadth is often important
to its cost advantage. I see that cost leadership is the technique that reduces
the cost of suppliers or customers to the competitors to increase its
competitive advantages.
Besides, in differentiation
strategy, differentiator incorporates one or several of those features into its
product offering to encourage buyer preferences for its brand over the brands
of rivals. (Collins and Porter, 1985) I
found that this strategy can catch the buyers who are strongly attracted to the
differentiating features and gain greater buyer loyalty to its brand.
Moreover,
innovation strategy is also one of the strategies to overcome competitive
forces. According to Shin (2001), by using the direct access to consumers
enabled by the Internet, companies can collect information, identify target
consumers, and better introduce products or services to meet consumers' needs.
I see that this strategy is very useful nowadays because people can easily
access to the Internet everyday.
Next, Growth strategy increase market share, acquire more customers, or sell more products to strengthen a company and increase profitability in the long run. (Hemmatfar, 2010)
Next, Growth strategy increase market share, acquire more customers, or sell more products to strengthen a company and increase profitability in the long run. (Hemmatfar, 2010)
Lastly, alliance strategy means working with business partners in partnership, joint ventures, or virtual companies. This strategy creates synergy, allows companies to concentrate on their core business, and provides opportunities for growth. (Hemmatfar, 2010) In my opinion, using this strategy can help businesses to work together as a team to strive for a common goal while the disadvantage is the conflict may occur.
References:
1.
Michael E. Porter (2008), Competitive Advantage: Creating and Sustaining Superior
Performance
(http://books.google.com.my/books?hl=en&lr=&id=H9ReAijCK8cC&oi=fnd&pg=PR15&dq=five+competitive+strategies&ots=p79CRFeX8L&sig=E5XWiV-mIPHv6Pd9_FJ6apJNBhc&redir_esc=y#v=onepage&q=five%20competitive%20strategies&f=false)
2.
John Collins and Michael E. Porter (1985), Strategy
and Competitive Advantage
(http://www.montana.edu/brester/agbe445/readings/Strategy%20Newer.pdf)
3.
Namchul Shin (2001), Strategies For Competitive Advantage In
Electronic Commerce
4.
Mahmood
Hemmatfar, Ph. D. (2010), Competitive Advantages and Strategic Information
Systems
5.
Yi Hua Hsieh and Hai Ming Chen (2011), Strategic
Fit Among Business Competitive Strategy, Human Resource Strategy, And Reward
System
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