BUSI770D5

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Feb 20, 2024

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School of Business, Liberty University Faizan Malik Week 5 Discussion Assignment Author Note: Faizan Malik I have no known conflict of interest to disclose. Correspondence concerning this article should be addressed to Faizan Malik: Fmalik@Liberty.edu Introduction The success of many organizations is often correlated to their position amongst the competition within their industry. To have a stronger position, organizations must formulate competitive approaches that not only align with the businesses’ capabilities but also the changing demands of their customers. To formulate an effective competitive approach, businesses must first select a competitive strategy that provides the greatest benefit for internal and external stakeholders. These strategies include low-cost provider strategy, broad differentiation strategy, focused low- cost strategy, focused differentiation strategy, and best-cost provider strategy. Once a competitive strategy is formulated, organizations must decide whether an offensive or defensive approach is best suited to their needs. Both the competitive strategy and approach have been selected, an organization can then explore possibilities of globalization and diversification for the business. However, regardless of competitive strategy and approach, businesses may need to look beyond traditional PESTEL analysis in terms of decision modeling. Process: Deciding on a Competitive Approach The process of determining an organization's competitive approach is a strategic and thorough process that requires a deep understanding of the industry, competitors, and a clear business approach. Gamble et al. (2021) describe five generic competitive strategies, which organizations can utilize to define their approach, with each strategy having its unique focus, ranging from offering the lowest price point to meeting customer expectations while offering lower prices (Gamble et al., 2021). These include the low-cost provider strategy which involves offering goods and services at the lowest price point among competitors, the broad differentiation strategy which focuses on differentiating products and services from competitors, the focused low-cost strategy which targets a specific market segment and offers lower prices, focused differentiation strategy which also targets a specific market segment but differentiates their offerings, and the best-cost provider strategy which aims to meet customer expectations while offering price points lower than customer expectations (Gamble et al., 2021). Once an organization has decided on its

competitive strategy, it must decide if it will pursue an offensive or defensive approach regarding its strategic actions, with considerations including the business’s competitive position, the overall nature of the industry, and the availability of resources and capabilities. Gamble et al. (2021) explain that offensive strategies are often most effective when an organization has a stronger competitive position in rapidly growing markets, whereas defensive strategies are better utilized in mature industries with strong competition (Gamble et al., 2021). It should be noted that the overall process for deciding a competitive advantage is often not a singular event, but rather a continual process of monitoring and adapting to changes in the market, such as introducing new products. Often referred to as innovative competitive advantage, this strategy helps organizations differentiate themselves amongst competitors and “is used to gain a sustainable competitive advantage in the global competitive environment through designing and developing all the resources, processes, and capabilities of the organization with innovations and formulation of management strategies by analyzing both the internal and external environment” (Shalender et al., 2017). Strategic Thinking: Deciding on Competitive Scope Once a competitive strategy is selected and an organization decides on an offensive or defensive approach, it can then look to expand its business into international markets and diversify into additional markets. Globalization provides the benefits of the ability to gain new customers, access to low-cost inputs of production, and access to resources and capabilities located in foreign markets (Gamble et al, 2021), whereas diversification can be used as an “a catalyst for achieving competitive advantages and the creation of synergy in market operations (Oladimeji & Udosen, 2019). Collectively, globalization and diversification make an organization’s competitive scope or the range of products, services, and markets in which a company competes and the extent it can serve a broad or narrow range of customer needs and preferences. Within competitive scope exists the additional subcategories of geographic and production scopes, which share similarities with globalization and diversification. Geographic scope refers to the regions in which an organization operates or targets its goods or services, ranging from local markets and extending into global markets. It allows businesses to assess the potential size and characteristics of their respective market, where smaller markets may be more homogenous when compared to larger global markets. Production, or distribution, scope refers to the extent to which an organization owns and operates the production/distribution of their goods and services and directly impacts the business through factors such as cost structure and quality control. The greater the control an organization has over its production, the more oversight it can have into its offerings and are more likely to be agile to meet customer demands. Both geographic and production scopes can impact an organization’s competitive advantage, as geographic scope allows businesses to tailor their offerings to the specific market, and production scope allows for cost reduction for the organization that can be used to lower the pricing of their products or services. Decision Models PESTEL analysis can assist organizations understand external factors that can impact their business, which then can be utilized to formulate a competitive approach. Once an organization

identifies changes in the external market, such as new technologies, it can modify its existing competitive approach to align with customer demands and stay ahead of the competition. However, the Gap-in-Market decision model may be a better fit for an organization to formulate their competitive approach. This decision model utilizes three axes, cost-effectiveness, prestige, and awareness, which helps identity “identify gaps in the market and position competitors according to the three axes” (Krogerus & Tschäppeler, 2017), which aligns with the offensive approach described by Gamble et al. (2021). As mentioned, and regardless of the decision model used, the key to success lies in regularly analyzing and adapting to changes in the market environment to ensure that the organization's competitive approach remains aligned with customer needs and preferences. Conclusion The process of formulating a competitive strategy begins with organizations selecting the strategy and approach that best suits the needs of internal and external stakeholders, often time requiring less traditional decision-modeling tools such as the Gap-in-Market model that analyzes cost-effectiveness, prestige, and awareness. Strategies are centered around cost and differentiation, while the approach is dependent on the current state of the market. Once a strategy and approach have been deemed effective, many organizations then look to expand the scope of their business with globalization and diversification, both of which further enhance their competitiveness within the market. References Gamble, J., Peteraf, M., & Thompson, A. (2021), Essentials of strategic management , McGraw- Hill Course Content Delivery (7th ed.), New York, NY. ISBN: 9781260785791. Krogerus, M., & Tschäppeler, R. (2017), The decision book: 50 models for strategic thinking., W.W. Norton & Co. (Revised ed.), New York, NY. ISBN: 9780393652376. Oladimeji, M. S., & Udosen, I. (2019). The effect of diversification strategy on organizational performance. Journal of Competitiveness , 11 (4), 120. Shalender, K., Singh, N., & Sushil. (2017). AUTOFLEX: marketing flexibility measurement scale for automobile companies. Journal of Strategic Marketing , 25 (1), 65-74. School of Business, Liberty University Faizan Malik Week 5 Annotated Bibliography Assignment Author Note: Faizan Malik

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I have no known conflict of interest to disclose. Correspondence concerning this article should be addressed to Faizan Malik: Fmalik@Liberty.edu Oladimeji, M. S., & Udosen, I. (2019). The effect of diversification strategy on organizational performance. Journal of Competitiveness , 11 (4), 120. This study sought to understand the effect that business diversification can have on organizational performance in Nigerian firms across varying industries. The researchers found that business diversification, including business and product expansion, had positive impacts on organizational performance when conducted in similar or existing domains, whereas businesses undergoing diversification in unrelated domains cause resourcing issues and reduced organizational performance. The study also found that the industry type affected the business diversification strategy, finding a stronger impact in manufacturing industries. Researchers equated this to these industries being more dynamic and requiring greater degrees of adaptability, which are often facilitated by diversification. The study was included in the Journal of Competitiveness, which is peer-reviewed and reputable. The study itself was clear and provided ample detail on the researcher’s methodology, including analysis that supported their findings. However, the study does carry some limitations in that it was conducted in a singular setting of Nigerian businesses and findings may not hold across all industries. Both authors are well-versed in the field, each having conducted numerous studies and having multiple publications. The writing style of the study was easy to follow and, overall, of high quality. The study is relevant to the discussion as it is directly correlated to the competitive approach, specifically diversification and its impact on organizational performance. The study highlighting how diversification outcomes are varied depending on the type of business and approach further emphasizes the primary aspect of the competitive approach, the ability to adapt strategies with changes in the market. Shalender, K., Singh, N., & Sushil. (2017). AUTOFLEX: marketing flexibility measurement scale for automobile companies. Journal of Strategic Marketing , 25 (1), 65-74. This study sought to understand market flexibility, or the ability of companies to respond quickly and effectively to changes in the marketplace and customize their business strategies to meet the demands of varying customer segments, in the context of automobile parts in India. The researchers developed a 22-item scale known as AUTOFLEX, which measured marketing flexibility across five dimensions: customer responsiveness, market intelligence, product development, channel management, and communication flexibility. The study found that the AUTOFLEX scale effectively measured market flexibility and the five dimensions had positive correlations amongst each other. The study also found organizations with higher levels of marketing flexibility were found to have higher customer satisfaction, higher market share, and higher profitability when compared to organizations with lower levels of marketing flexibility.

The study was included in the Journal of Strategic Marketing, which is peer-reviewed and reputable in the marketing field. Researchers have conducted and published multiple studies, showing that having expertise in the field. The study was well-written and organized, offering a comprehensive review of existing literature and offers a new measuring scale that can be used across varying industries. However, the study does carry limitations in that it did not account for other factors that may influence company performance, such as market competition, technological advancements, and changes in customer preferences. The study fits into the discussion of the competitive approach as marketing flexibility and adaptability to changes in the market is a hallmark of a competitive organization. The study suggested that organizations that are more flexible in their marketing strategies are better able to compete in the marketplace and achieve better performance outcomes. School of Business, Liberty University Faizan Malik Week 5 Student Reply Author Note: Faizan Malik I have no known conflict of interest to disclose. Correspondence concerning this article should be addressed to Faizan Malik: Fmalik@Liberty.edu Summary Hey Malte, great post! You gave an excellent overview of the process of deciding a competitive process, including the significance of understanding one’s industry and the current market dynamics. You also highlighted the value of conducting the proper internal and external environment analysis before deciding on an approach, as they relate to the five generic competitive strategies which Anwar and Shah (2021) explain are “still regarded as a key component to secure competitive position and superior performance” and “remain effective in theorizing and explaining practical contexts in Europe and Asia.” You then describe the process and significance of geographic and production/distribution scope, as they collectively determine the organization’s competitive scope. You concluded by highlighting how SWOT analysis can be utilized along with the five generic competitive approaches, as they allow an organization to make more informed business decisions. Critique My only critique is the choice of using a SWOT analysis when formulating a competitive approach, as there are decision models better suited for such scenarios. SWOT analysis may carry a limited focus and may not take into account the complexity that exists within competitive markets, as well as not provide true guidance on decision-making. For formulating a competitive approach, an organization may be better suited to use the Gap-in-Market decision-making model which analyzes cost-effectiveness, prestige, and awareness, which helps identity “identify gaps in the market and position competitors according to the three axes” (Krogerus & Tschäppeler,

2017). As stated by Prasteyo et al. (2022), “In general, unexplored market gaps are a better part of the value chain that connects institutions to the wider socio-economic and entrepreneurial culture, inequality, patterns of innovation, economic growth, and employment” (Prasetyo, 2022). References Anwar, M., & Shah, S. Z. (2021). Entrepreneurial orientation and generic competitive strategies for emerging SMEs: Financial and nonfinancial performance perspective. Journal of Public Affairs , 21 (1), e2125. Krogerus, M., & Tschäppeler, R. (2017), The decision book: 50 models for strategic thinking., W.W. Norton & Co. (Revised ed.), New York, NY. ISBN: 9780393652376. Prasetyo, P., Setyadharma, A., & Kistanti, N. (2022). The role of institutional potential and social entrepreneurship as the main drivers of business opportunity and competitiveness. Uncertain Supply Chain Management , 10 (1), 101-108.

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