What are the dimensions of a competitive strategy?

The correct balance between all the variables suggested by Mr.Tohamy, and the right people for every key function define the dimensions of a competitive strategy.

Companies' strategies for competing in an industry can differ in a wide variety of ways. However, the following strategic dimensions usually capture the possible differences among a company's strategic options in a given industry:

·         Specialization:

The degree to which it focuses its efforts in terms of the width of its line, the target customer segments, and the geographic markets served;

·         Brand identification:

The degree to which it seeks brand identification rather than competition based mainly on price or other variables. Brand identification can be achieved via advertising, sales force, or a variety of other means;

·         Push versus pull:

The degree to which it seeks to develop brand identification with the ultimate consumer directly versus the support of distribution channels in selling its products;

·         Channel selection:

The choice of distribution channels ranging from company-owned channels to specialty outlets to broad line outlets;

·         Product quality:

Its level of product quality, in terms of raw materials, specifications, adherence to tolerances, features, and so on;

·         Technological leadership:

The degree to which it seeks technological leadership versus following or imitation. It is important to note that a firm could be a technological leader but deliberately not produce the highest quality product in the market; quality and technological leadership do not necessarily go together;

·         Vertical integration:

The extent of value added as reflected in the level of forward and backward integration adopted, including whether the firm has captive distribution, exclusive or owned retail outlet, an in-house service network, and so on;

·         Cost position:

The extent to which it seeks the low-cost position in manufacturing and distribution through investment in cost-minimizing facilities and equipment,

·         Service:

The degree to which it provides ancillary services with its product line, such as engineering assistance, an in-house service network, credit, and so forth. This aspect of strategy could be viewed as part of vertical integration but is usefully separated for analytical purposes;

·         Price policy:

Its relative price position in the market. Price position will usually be related to such other variables as cost position and product quality, but price is a distinct strategic variable that must be treated separately;

·         Leverage:

The amount of financial leverage and operating leverage it bears;

·         Relationship with parent company:

Requirements on the behavior of the unit based on the relationship between a unit and its parent company. The firm could be a unit of a highly diversified conglomerate, one of a vertical chain of businesses, part of a cluster of related businesses in a general sector, a subsidiary of a foreign company, and so on. The nature of the relationship with the parent will influence the objectives with which the firm is managed, the resources available to it, and perhaps determine some operations or functions that it shares with other units (with resulting cost implications), as has been discussed in Chapter1;

·         Relationship to home and host government:

In international industries, the relationship the firm has developed or is subject to with its home government as well as host governments in foreign companies where it is operating. Home governments can provide resources or other assistance to the firm, or conversely can regulate the firm or otherwise influence its goals. Host governments often paly similar roles.

Each of these strategic dimensions can be described for a firm at differing levels of detail, and other dimensions might be added to refine the analysis; the important thing is that these dimensions provide an overall picture of the firm's position.