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Tools Used In Development Of Competitive Strategy

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Tools Used in the Development of Competitive Strategy

To develop an effective competitive strategy, which will help the business be a step ahead of its competitors, primary tools relating to various available market forces and operations need to be incorporated in the development of the competitive strategy. One of the available tools to be put into consideration when designing a competitive strategy is what is known as the five forces. One suspect of the five forces is the supplier bargaining power. This is an essential aspect of any business since suppliers must be present for a company to deliver goods and services to a customer. Suppliers have bargaining power, and therefore, when developing a competitive strategy, the business must evaluate its relationship with its suppliers.

Another force is the bargaining power of the buyer. This is true because any buyer in a given market place is likely to affect the price of goods as well as influencing activities that influence and enhance their negotiating power. To develop a competitive strategy, the business needs to be familiar with the bargaining power of the buyer as well as their recommendations and requests to build a better product than their competitors. Also, the threat of new entrants is yet another tool that the business needs to be familiar with. The company needs to be aware of any substantial barriers to entry in the industry to put in motion effective strategies towards the same. Also, another tool that needs to be looked into is the threats of substitutes. When developing a competitive strategy, a business must be ware of the substitute products in the market and make sure the approach encompasses ways to make an outcome much better than the substitute.

Another tool that will be helpful to a business in developing a competitive strategy is industry rivalry. The industry participants produce the same products, and as a result, there is bound to have stiff competition between the businesses. There is, therefore, a need to evaluate this aspect when developing a competitive strategy and ensure it focuses on making better products than those of the other counterparts in the industry (Noor, 2014).

Additionally, another tool that can be used to develop a competitive strategy is using SWOT analysis, which is involved with digging up strategic information about the business and the competitor. This tool will include a study of the Strengths of the company, which can either be internal e.g., brand name, capital base patents, or external e.g., economic situation, government policy, or current trends. Additionally, it will involve Weaknesses study, which can be used by the competitors to exploit them. Opportunities will also be featured and will include factors or scenarios which give the business an undue advantage over the competitors. The other factor is Threats, which involve factors that can make a company endangered. Another tool to be used in developing a competitive strategy is the pricing strategy. This strategy should ensure that competitive advantage is maintained for the business to stay ahead of its competitors (Profitable venture, 2018).

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