Much has been written and said about business strategy over the years, not least by the great Michael Porter.
Strategy is about setting yourself apart from the competition. It’s not a matter of being better at what you do – It’s a matter of being different at what you do.
The subject of Strategy is designed as guide to give you the in depth understanding of your business, your market, and your competitors.
It will therefore help you to position your business effectively in the market for Growth.
Growth strategy allows companies to expand their business.
Growth can be achieved by practices like adding new locations, investing in customer acquisition, or expanding a product line.
A company’s industry and target market influences which growth strategies it will choose.
Sustainable Competitive Advantage:
A Competitive Advantage is anything that allows a business to outperform other businesses in the same industry or sector (its competitors).
A Sustainable Competitive Advantage is one that lasts in the longer term.
Sustainable competitive advantage can arise from anything that means that your customers are more likely to buy your products or use your services.
Because a sustainable competitive advantage leads to long-term gains over your competition, it is highly sought-after by businesses
Businesses around the world have long tried to develop Sustainable Competitive Advantage.
This means having something that gives you an edge over your competitors, and that continues to do so.
The concept can apply to both people and businesses but, in this article, it is largely only applied to businesses.
In this case, sustainable competitive advantage means something that your customers see as a long-term reason to buy from you rather than your competitors.
A crucial part of developing a sustainable competitive advantage is being able to identify areas where you have an advantage, however small.
You can then build on that and develop it further.
An advantage may come from something that you do better than your competitors, or it may come from identifying a gap in the market that nobody has yet worked out how to fill.
The key is to find those advantages and then exploit them to build yourself a unique place in the market, and in the hearts and minds of your customers.
To identify areas where you have an advantage over your competitors, you need to understand your business, your competitors and your market.
For both businesses and individuals, the key to success is identifying and building on your strengths, and managing your opportunities.
To do this, you need to be able to gather information, sort through it and decide what is relevant.
You must then be able to draw on it to identify useful insights, and finally, put those insights into action through strategic decisions.
Competitive Intelligence or Market Intelligence:
There is no single, agreed definition of either Competitive Intelligence or Market Intelligence.
Some sources suggest that market intelligence is a subset of competitive intelligence, and others that the reverse is true, or even that the two are the same.
Broadly speaking, the term ‘market intelligence’ seems to have been around longer.
It is generally agreed that market/competitive intelligence:
• Includes both qualitative and quantitative information;
• Provides information about a company’s competition, customers and markets;
• Looks at past, present and future situations and scenarios;
• May need to be gathered both directly and indirectly, from a wide range of sources;
• Is used to make both strategic and tactical decisions about marketing, product development and stakeholder management
Both provide information to help you understand more about your market and make the right decisions for your company.
Understanding the market, including both your customers and your competitors, is vital to success in business, and feeds into a wide range of strategic analysis tools.
Generally speaking, any business analysis, using any tool, will be better with more information (within limits).
BUT… the information must be Accurate.
If you use poor-quality information, then you will get poor-quality, inaccurate results.
The phrase garbage in, garbage out definitely applies to market intelligence and business analysis.
The more assumptions you make, or the more you use unverified data from anecdotal sources, the less reliable your analysis will be.
Ethical Practice and Competitive Intelligence:
Competitive intelligence is NOT industrial espionage.
It is an ethical and reasonable business practice. However, this does mean that you need to avoid any unethical practices when gathering your information.
For example, do not be tempted to call your competitors and pretend to be a potential customer to gain more information about their prices.
Equally, you need to avoid any possible accusations of collusion because you have shared your prices with competitors in exchange for information about theirs.
Using Information to Support Decision Making:
Once you have your information, and you know that it is high enough quality for your purposes, the final step is to use it in your analysis, to support your decision-making.
On an individual basis, this is relatively easy: you just have to decide that is what you are going to do.
Data vs. Intuition – ‘Gut feeling’
It is always going to be difficult if your analysis presents you with a result that your ‘gut feeling’ says is wrong.
Under these circumstances, it is wise not to ignore either.
Instead, you probably need to look for more information to confirm one or other position.
Don’t assume that your data is correct, simply because it contains numbers. There may be a fault in either your data or your analysis. Check both carefully and look for other information that could change your analysis.
Equally, don’t assume that your gut feeling must be right. Ask yourself why you think that, and then look for something that would challenge your thinking.
The key with using information to support decision-making is simple: Just Do It!
As you gather more data and information, and use it every day, it will become more routine.
You will soon start to see the benefits of decisions driven by accurate information, rather than anecdote and gut feeling.
There are several Strategy tools that could be used to help your business analysis process to identify and create a Sustainable Competitive Advantage.
I have listed out the Top 5 Tools in the context of this article you may find useful that focus on Internal Business Analysis:
- SWOT Analysis.
- McKinsey 7 S Model of Organizational Alignment.
- USP Analysis.
- Core Competence Analysis.
- Value Chain Analysis
I have listed out the Top 5 Tools in the context of this article you may find useful that focus on External Business Analysis:
- Porters Five Forces Model.
- PESTLE Analysis.
- Scenario Analysis.
- Boston Matrix.
- Ansoff Matrix.
Other Strategy Tools:
- Customer Segmentation.
- 7 P’s of Marketing.
- Game Theory Matrix.
Understanding your business, the internal environment and its external environment and market is crucial to identifying opportunities to develop a sustainable competitive advantage.
Business analysis is therefore a vital tool in any organization’s armoury.
However, analysis is only the start.
It will help you to identify suitable opportunities, and where risks might lie, and also tell you whether you have the skills needed to take advantage of the opportunities and manage the risks.
You then need to take action to deliver that sustainable competitive advantage.
In other words, you need to use the insights generated from your analysis to drive your strategic decision-making and deliver action.
There is a condition that sometimes affects organizations that is colloquially known as ‘Analysis–Paralysis’.
It means that you are stuck in a place where you keep gathering more and more information, and doing more and more analysis because you do not know what to do next.
You use more tools and get different results. Your results contradict each other. Or your results are consistent, but you do not like what they say. Whatever the cause, there is something that is stopping you from taking effective action.
At this point, you have to recognize that there are no perfect decisions in business.
There are only the decisions that you take, and the ones that you do not.
There will always be risks to any course of action.
Often, the worst thing to do is nothing, because it allows your competitors to get ahead of you.
The best thing that you can do, therefore, is make a decision about what to do NEXT, and then manage the risks associated.
Sometimes any decision is better than none!
If you want to Learn more on how to Improve your Strategic Thinking to help you Grow your business, come and have a chat with CFO Coach today.
We will map out your unique roadmap and help you look for the opportunities to push for a Sustainable Competitive Advantage.
Get in touch with me to learn more by SMS on +260967924720 or email to Irfan.Sayed@cfocoach.co.zm or Visit www.cfocoach.co.zm
Alternatively you can choose your preferred date to set up a free 15 minute Power Discovery Call at your convenience by clicking the link – CFO Coach.
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