An Analysis of the Modern Competitive Environment and Business Strategies

Creating a strategy

The perfect situation is to have no competition at all. In today s competitive environment you might think this is inconceivable. Perhaps you need to reconsider because there are organizations that have succeeded in developing non-competitive environments by playing the game differently.

In every industry, we can identify the leaders. These leaders have shaped the rules of their game. Competitors tend to copy the leader s strategy and get caught in a fake strategy. Unfortunately, there is no light at the end of that tunnel, and it is a continuous fight for new market share.

There are cases of such companies in every industry. In the airline industry, there are new entrants like Easyjet, who have managed to create and deploy a distinctive strategy. Easyjet changed the rules of the game effectively. They have side-stepped the conventional methods of selling through travel agents and offered very flexible and affordable air travel direct to the consumer.

Domino s Pizza developed a distinctive strategy in a very ordinary industry.

Domino s founder succeeded by changing the rules of the game. The founder introduced the idea of guaranteed home delivery and made it work by developing a special insulated pouch to keep the pizza fresh and warm.

Michael Dell, of Dell Computer, also changed the rules of the PC industry by marketing directly to Joe Public instead of through computer retailers. Dell also changed the marketing rules in Europe, when all the so-called experts thought selling computers via mail order would not work.

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Dell changed the rules again in early 1997 by adopting the Internet as a medium for direct selling.

Anita Roddick deployed a distinctive strategy in the world of cosmetics helping her grow The Body Shop into a multi-million-pound business. She changed the rules by using environmentally friendly plain products and packaging, very little advertising, grassroots marketing, and sold her range of products through exclusive franchisees. She created a new market within the cosmetics industry with no imminent competitor. (1999)

A strategy without key performance criteria is hot air. Capland and Norton use a Balanced Scorecard to link performance and measurement. The success of the vision and strategy can be measured by specific goal achievement in four vital areas: Financial, Customer, Internal, and Growth. By specifying the areas and features that will be measured, every employee knows what to do. Only a small handful of companies have created the measurements for success. When managers are asked to describe what their most important tasks are, most will not discuss measurements. Goals without the processes to achieve the goals and goals with no measurement are like a forward going on the football pitch blindfolded with a mission to score. In reality, this is mission impossible. Unfortunately, there are numerous struggling organizations engaged in this mission impossible, playing on the field but not scoring enough, working but not being productive. Success is the difference between working hard and working smart.

Strategic Planning can be defined as the process that determines the future direction of an organization, practice, or business. Its foundation is a strategic thinking process, its conclusion is a logical and timely plan that, when implemented, will ensure your success. It is the process of thinking about and envisioning the future to which you aspire, and the growth you will have to realize to achieve that future state. Comprehensive strategic planning involves both questions of what the enterprise is to become and how it will become it. You have to analyze your strengths and weaknesses, those of your business products and services, and those of your competitors. Properly done, the planning focuses on what business you are in and highlights which baggage to discard to free up key people and dollars for reinvestment. It is more than long-range planning, which typically only identifies current trends to anticipate the future, and then forces plans to be developed accordingly. It is more than reviewing and analyzing numbers and using them to project the future. Strategic Planning is a proactive, holistic approach to building the business that allows you to create your future, not simply reacting to current trends. Define the future you want to create for yourself and your business. Establish your values, set clear goals and specific time frames, and crystallize the action steps that will help your vision become a reality. Capland and Norton (1999)

Ask most chief executives and business owners if they have a Strategic Plan and without hesitation, the answer will be yes. Ask them what their vision and mission for the company is and they will give you a blank look! It s simply because Strategic Planning is confused with business planning. Business planning is the process that actualizes the Strategic Plan and is typically much more substantial and detailed. It is more micro in approach, whilst the Strategic Plan provides the foundation and framework for the business plan. It s the macro picture. Capland and Norton (1999)

In conclusion, it is evident that when you create a strategy with the intent to change the rules of the game on the leader, you disable them, sometimes for extended periods. Changing the rules without a specific strategy does not guarantee success, but when a distinctive strategy is well thought out and implemented it can be extremely effective, as we have seen in the above examples. It is very difficult for a leader to respond to a competitor with a distinctive strategy. The leader’s organization is structured to do business according to the rules it has set. Changing or modifying that structure is not so easy and in certain cases can take years. This can be a tremendous opportunity to gain market share.