Strategic Planning with the Competitive Advantage Framework
Competitive Advantage is a technique that enables better strategic planning in business.
The three approaches to sustainable competitive advantage are:
- Cost leadership - Cost advantage occurs when a firm delivers the same services as its competitors but at a lower cost
- Differentiation - Differentiation advantage occurs when a firm delivers greater services for the same price of
its competitors. They are collectively known as positional advantages because they denote the firm's position in its
industry as a leader in either superior services or cost
- Focus - A focused approach requires the firm to concentrate on a narrow, exclusive competitive segment (market niche), hoping to achieve a local rather than industry wide competitive advantage. There are cost focus seekers, who aim to obtain a local cost advantage over competition and differentiation focuser, who are looking for a local difference.
When more than one large company strives for a cost-leadership position, the result is a price war with declining profit margins for both businesses.
Whichever strategy is chosen, the company cannot ignore the other elements. (E.g., a company competing on differentiation must still be cognizant of cost.)
Other Strategic Planning Frameworks
- 4P's Marketing Mix
- Seven S (7S) Management Framework
- AIDA - Attention, Interest, Desire, Action - Buying Process
- Ansoff's Matrix - Product-Market Growth Matrix - Expansion Strategy
- BCG Growth-Share Matrix
- Bass Diffusion Model - Product Adoption and Innovation
- Blue Ocean Strategy
- Choice Model for Decision-Making Behavior
- Competitive Advantage
- Core Competence - Collective Learning in the Organization
- Cost-Benefit Analysis
- Delta Model
- ERG (Existence, Relatedness, Growth) Theory of Motivation
- Experience Curve
- Framing Effect on Psychology and Marketing
- GE (McKinsey) Matrix
- Growth Phases
- Predicting Industry Evolution and Change
- OODA Loop - Observe, Orient, Decide, Act
- PDCA (Plan, Do, Check, Act) - The Deming Cycle
- PEST Analysis - Political, Economical, Social, Technological, Environmental, and Legal Factors
- Perceptual Mapping - Brand Marketing
- Porter's Five Forces
- Product and Marketing Positioning
- Product Lifecycle (Industry Lifecycle)
- Root Cause Analysis
- SWOT Analysis - Strengths, Weaknesses, Opportunties, Threats
- Technology Adoption Curve
- Value Chain
- Balanced Scorecard
- Benchmarking
- Customer Segmentation
- Pricing Strategy & Price Optimization
- Mergers and Acquisitions (M&A)
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