GLO-BUS Strategic Plan: Competitive Strategy Analysis

Low-Cost Leadership Strategy

Our company employed a low-cost organizational strategy, striving to achieve lower overall costs than competitors and appeal to a wide variety of customers — typically by underpricing rivals. Attempting to be the industry's overall low-cost provider has been a highly effective competitive approach in this market, as there are many price-sensitive customers (Cunningham & Harney, 2012). We achieved low-cost leadership and became the sector's lowest-cost organization, capitalizing on the absence of rivals with comparably low costs. Our strategic focus is meaningfully reduced costs relative to competitors in terms of affordability. In pursuing a cost advantage over rivals, we incorporated features and services that customers consider essential. For maximum efficiency, our company achieved this cost advantage in ways that are difficult for competitors to match or replicate. If opponents find it relatively easy or inexpensive to imitate our low-cost methods, then our cost leadership advantage will be too short-lived to generate a meaningful edge in the market.

Using this strategy, we had two options for translating a low-cost advantage into attractive revenue performance. In the first option, we used the lower-cost advantage to underprice competitors and attract price-sensitive buyers in sufficient numbers to improve total earnings. The key to profiting from underpricing competitors was to keep the size of the price reduction smaller than the size of the company's cost savings. In the second option, we maintained current pricing and market share, using the lower-cost advantage to earn a higher profit margin on each unit sold. Both approaches had the potential to raise total earnings and return on investment (West, Ford & Ibrahim, 2010).

The company focused on three defensive strategies to improve its market standing and financial performance. Because of continuous competition, we needed to engage in defensive techniques to fend off various competitors. The primary objective of defensive strategy was to make a potential attack unattractive and deter competitors from targeting our company (Cunningham & Harney, 2012). We sought to shape expectations about the industry's profitability and convince potential competitors that the return on investment would be so low as to not justify entering the market. This defensive technique worked best when implemented before the opposition had made a market investment.

Defensive Strategies for Market Protection

A continuous improvement approach called for a persistent pursuit of enhancements in product quality, costs, manufacturing processes, product development, and distribution. The choice of improvement areas depends on the value proposition of the organization. As a low-cost provider, we consistently sought methods of reducing costs through economies of scale, expense reduction, and the introduction of new production methods. As a differentiated competitor as well, we also pursued methods to maintain our competitive advantage through quality improvements, innovation, and new features.

Our second strategy was signaling. We used this approach to declare our intention to take specific actions. We made announcements through press releases, media interviews, trade publications, speeches, and newspapers. These announcements served multiple goals. They signaled dedication to the market and sought to preempt or deter competitors. As an established firm, we effectively discouraged potential new entrants by conveying the threat of retaliation. A higher perceived probability of retaliation and its intensity translates into a lower likelihood of attack by rivals. We reinforced our reputation for vigorous retaliation through the manner in which we responded to previous competitive challenges, signaling our commitment to defend our market share.

When we entered this industry, our objective was to become established first, consolidate our position, and then expand. New entrants are especially dangerous if they enter the industry by disrupting the competitive norms with drastically new products or innovations in cost, delivery, distribution, service, or positioning. Newcomers entering with radically new products often originate from unrelated industries. As an established business, it is more effective to protect our position while recently entered competitors are still small and vulnerable, rather than waiting until they become strong and pose a serious threat.

Design is increasingly important in the global digital market, where customers expect a wide range of offerings and short innovation cycles. Long gone are the days when companies could impose premium fees on products sold in foreign markets. As such, we adapted our current product lines to reflect local market sensibilities. To succeed, we needed not only to understand local and regional tastes, but also to design products according to each local market's expectations. We hired local designers in each market to reshape the product category and produce affordable, locally relevant brands.

Global Marketing Orientations

The globalization of markets demands total commitment to international marketing. In our company, we embraced the perspective that the world is a single market. In thinking and acting globally, we customized our marketing strategies to different world regions based on national, regional, and cultural differences to serve specific target markets (Lewis, 2007). To standardize our marketing mix, our strategy grouped countries by economic, cultural, political, technological, and social similarities. We recognized that we must become more globally oriented in order to compete effectively, shifting from an organization that treats foreign operations as secondary to one that views the entire world as a single borderless market.

In this approach, we adopted a global viewpoint to formulate our vision, objectives, and strategy, while making adaptations in each market based on local culture and market conditions. Setting a global vision helped anchor our primary business objective — profit maximization through extensive market expansion across continents and countries. Our strategy had to remain flexible, because markets differ in terms of religion, politics, culture, and standard of living (Hitt, Ireland & Hoskisson, 2007). Attempting to impose a rigid strategy across different regions risks customer misunderstanding and contradictions, which could ultimately lead to failure in those markets.

Shifting resources became necessary as we sought to increase the effectiveness of certain areas. Successful strategy execution is often characterized by frequent resource adjustments; though difficult, these shifts are a vital component of the strategy implementation process. In our case, we determined that the production software could perform most effectively as a standalone function, so we redirected human resources to the design department to better support our competitive priorities.