Employing Strategy in a Competitive Environment

The environment of any organization consists of internal and external factors. An organization should conduct a scan of its environment in order for it to determine development, and a forecast on the factors that may influence the success of the organization. Scanning the environment refers to the possession and utilization of the information that an organization has about trends, patterns, occasion and the external and internal relationship that are within an organization. A scan of the environment may assist the management team of an organization in making a decision about the future path of the

To stay tuned to the recent situation in order not to miss perspective opportunities, an organization should go on with continuous scanning of its environment. According to Jobber, environmental scanning is “the process of monitoring and analyzing the marketing environment of a company” (Jobber, 2010, p.93). Aguilar states (Aguilar, 1967, cited in Costa, 1995, pp.4-5) that environmental scanning serves the purpose of gathering information about the facts and events happening around the company in order to let the management lead the organization in the right direction. Most of the authors agree on the same main function of environmental scanning.

Environmental scanning plays a critical role in the strategic management planning process. The environmental scan provides important information, which may be useful in forecasting changes for the future.

Environmental scanning involves an organization to look at any trend, opportunity or threat that could create issues for their company. Once any of these issues are identified, the organization should consider new strategies that react to these external factors. Issues should be examined that involve not only direct customers and suppliers, but also competitors, any changes in regulations and possible political involvement. External factors will be constantly changing so environmental scanning should occur frequently and regularly to ensure the current issues have been captured. Research and data analysis can help drive decisions regarding overall marketing changes that might be necessary.

Environmental scanning can be viewed as a way of acquiring information about outside events that can aid organizations in first identifying potential trends, then interpreting them

All companies are affected by external factors. In order for a company to sustain or gain a competitive advantage it must constantly analyze its threats

Identifying influencing factors of a company’s macro-environment helps in the strategic development and management within a company. The macro-environment outlines an industry and the competitive environment as seen in figure 3.1, (Gamble, Peteraf, Thompson, 39). Within the macro-environment there are the political factors, economic conditions, sociocultural forces, technological factors, environment forces, and legal/regulatory factors. All of these factors blanket the habitat an industry and its competition thrive in. Inside the industry and competitive environment there are five factors that influence an individual company. The five factors are suppliers, rival firms, new entrants, buyers, and substitute products. The biggest impact on a company are these five factors. For example, Under Armour focuses on their industry and competitive environment to survive and grow. Their strategy to win over the market share from Nike and Adidas consists of expanding a stable and original brand within record time, taking an innovative approach to their product line-up and brand-name appeal where the market seemed to be barren, and lastly, the company enters in the foreign market early on to establish its brand and influence markets outside of the US.

Compare and contrast the market-based approach and the resource-based view as approaches to competitive strategy. To what extent are they rival or complementary views?

I am going the review the Article "The Five Competitive Forces That Shape Strategy" written by Micheal E. Porter. This article was published in Harvard business Review in year 2008.

Fast and Furious will employ a global low-cost leadership strategy and pursue a competitive advantage by having lower costs and selling entry level cameras at low prices relative to rivals. We designed our cameras with basic features and mid level product enhancements, to produce a two star level product. Some of these specifications include 8mm image sensors, 230k pixel lcd display screens, 2704x1520 pix image quality, etc. By producing a lower quality camera, we were able to manufacture and sell our product at a lower cost. This allowed us to gain a competitive advantage and outsell our competitors from the get-go. Many of our competitors adopted this strategy later in the simulation,

Organizations successful at strategy implementation effectively manage six key supporting factors :     1.  Action Planning

Michael E. Porter, associate professor published the article titled “How Competitive Forces shape Strategy” in Harvard Business Review in 1979. This article is retitled as “The Five Competitive Forces That Shape Strategy” and published in Harvard Business Review in 2008. Michael E. Porter developed the model of Five Competitive Forces which is defined as “Competitive Strategy – Techniques for Analyzing Industries and Competitors”. It has become a main device for analyzing an organizations structure in strategic practices.

-The costs which can be borne, and the investment required to compete in the industry.

There are two types of environmental factors, internal and external. External environments are the forces and events outside a company that have the capability to influence or effect it. There are two types of change, which are stable Environments and dynamic environments. In stable, the rate of change is slow and the basic business functions change little over a long period of time. In Dynamic, the rate of change is fast, one can use the Smartphone business as a perfect example. Every year they release a new model with new technology and every year the environment of the market is changing and expanding. One might think that a company is either stable or dynamic, but in actuality, most companies go through periods of both phases. According to punctuated equilibrium theory, companies go through long periods of stability when small change happens, followed by short, complex periods of fundamental change; and finishing with a return to stability. Another characteristic of external environments is resource scarcity which is the abundance or shortage of important resources for an organization. Let’s say I am running a farm and there is a water shortage, this would affect how much I am producing and at what cost I would charge.

Competitive strategy is the moves and methods that the firm has taken and is taking to appeal buyers, improve its market position, and to endure competitive pressures. The strategy is about what a firm’s capability to try to knock off competitors and attain competitive advantage, which can be offensive or defensive. There are three approaches to competitive strategy, which are low-cost leadership strategy where struggling to be the overall low-cost manufacturer in the in industry. Moreover, pursuing to distinguish one’s product offering from competitors (differentiation strategy), and the last one is focus or niche strategy where aiming on thin portion of the market rather than the whole market (Porter, 1998).