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Business, Economics, MBA, strategy

The competitive positioning of the Firm

When running a business it is important to identify external and internal factors of influence, and once this is done to decide and implement a strategy for gaining a competitive advantage over the competing firms. Michael Porter (also know for Porter’s Five Forces Model) has suggested there are 3 general methods in which a firm can gain a competitive advantage. These include:

  1. Cost Leadership
  2. Differentiation
  3. Focus

Cost Leadership Stratgey

This form of strategy, involves the firm minimising the cost of production (increasing production efficiency/technical efficiency) so that it can offer (without decreasing the quality of production) the lowest priced goods.

Differentiation

Through product innovation, branding, customer service and support, marketing and brand affiliation, a firm can increase the apparent quality of their product, develop customer loyalty and thus increase sales without producing at the lowest cost. A great example of this is the premium car brand, Mercedes.

Focus

With this strategy a company can use either Cost Leadership or Differentiation in a narrow sector of the market to gain an advantage over a broader focussed competitor. This form of competitive strategy can be used for a newer entrant to the market, and one that is keen in ‘getting its foot in the door’. Once the firm has entered the market, and attained market share then a broadening of products and services can occur to compete on a larger level with competitors.

Porter goes on to argue that if none of the above it decided upon and implemented, then the firm runs the risk of ‘being stuck in the middle‘.

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About loganjehall

I focus on building an internal culture focussed on listening to and working alongside customers to build value for all stakeholders. Real lasting change that understands the real needs of the customer is the only way to ensure a dynamic constant state of learning and innovation. I am a highly experienced sales, marketing and business professional with wide ranging experience in varied industries. Having worked in both B2B and B2C I understand sales and business is really about P2P (people to people) and therefore always focus on relationships and engagement. "Business is socialising with a purpose" (Gaping Void) Passion, people, vision, strategy, customers, advocates, believers, innovation, customer engagement, social, knowledge management and appropriate use of technology are vital in the attainment of business goals. I am a co-founder of Movebubble, a new technology startup in #Proptech. This blog is really here to allow me to develop my voice and ideas, and gain feedback from a wider audience than just the lecture or breakout room. Hopefully i can introduce some interesting points, and experiment with digital, marketing, engagement, social media and SEO techniques and tips i am learning on the way. I hope you enjoy my posts, please let me know what you think with some feedback.

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