The competitive strategy of the enterprise is being developed on. Functional strategies. Budget for the planned period

Competition strategies are a set of initiatives aimed at attracting and satisfying customers and strengthening market position. M. Porter identified three types of competitive strategies:

Price leadership - attracting consumers through the lowest price in the market;

Differentiation - attracting consumers by maximizing the differences between the company's product and competitors' products;

Focusing - the company's orientation towards a narrow segment of consumers based on some characteristic.

The choice of a competition strategy is based on the definition of three components: product (the degree of differentiation of the product), the market (the degree of market segmentation), the distinctive competencies of the company (Table 9.1). In practice, competitive strategies require additions.

1. In addition to leadership in prices, there is a strategy of optimal costs - increasing customer value due to higher quality at prices at the level of competitors or lower.

2. Implementation of the focusing strategy is possible in two ways:

Focusing on a low cost basis. Orientation of the company to a narrow segment and crowding out competitors due to a lower price;

Focus on product differentiation. Orientation of the company to a narrow segment of buyers and crowding out competitors due to a unique offer of goods or services.

3. Possible options for combining the strategy of price leadership and differentiation. The methods of cost reduction in differentiation are the widespread use of standard assemblies and parts, reducing marketing costs. Companies charge a premium price over the price of a pure price leader, but which will be lower than that of a pure differentiator.

Table 9.1

Characteristics of competitive strategies

	Product differentiation	Market segmentation	Distinctive competence
Price Leadership	(mostly by price)	(mass market)	Manufacturing and materials management
Differentiation	(mainly by properties)	(many market segments)	R&D, sales and marketing
Focusing	Low to high (prices or properties)	(one or few segments)	All kinds of distinctive competence

Let's consider the content of basic competitive strategies.

Price Leadership- it is the ability to offer a lower price at the same level of profit, and in a price war, the ability to compete with better starting conditions. The price leadership strategy is good when:

Strong competition for price,

Production of a standard product or a product intended for a wide range of consumers,

The standard use of the product.

The formation of a price leader is based on the reorganization of the value chain by improving technology, direct marketing, simplifying product design, rejecting additional consumer properties and focusing on basic needs.

Analyzing the price leader according to Porter's model of competitive forces, the following features can be distinguished:

The price leader is relatively safe from potential competitors while maintaining a price advantage;

The price leader is less sensitive than competitors to the increasing pressure of suppliers at the entrance and buyers at the exit: the mass market strengthens its positions in "trade";

When replacement products enter the market, the price leader can lower the price and maintain market share.

There are the following disadvantages of the strategy:

Protracted price wars are possible;

Competitors can use price reduction methods;

There is a risk of being overly addicted to cost cutting;

The strategy is not suitable for all types of business.

Differentiationinvolves achieving a competitive advantage by creating products or services that are perceived by consumers as unique. At the same time, companies can set a premium price. The strategy is implemented when consumer demands and preferences cannot be satisfied with standard products or the previous composition of sellers. Differentiation can be achieved in different ways: unique product qualities, large selection , unique service, design, etc. The following types of differentiation are distinguished:

Product differentiation is the offering of products with better characteristics than the competition;

Image differentiation is the creation of an image of an organization and / or products that distinguishes them from competitors at their best;

Service differentiation is the offering of a higher and diversified level of related services.

Analyzing the differentiator according to Porter's model of competitive forces, the following features can be distinguished:

The company has an advantage as long as consumers maintain a steady loyalty to its products;

Powerful suppliers are rarely a problem because the company is more price-oriented than cost-conscious;

Substitute products pose a threat only if they are able to satisfy consumers to the same extent;

Maintaining uniqueness in the eyes of consumers, especially in imitation conditions, becomes the main problem.

Differentiation is usually associated with increased costs, therefore, it is successful if it provides an increase in sales revenue. The strategy may fail under the following circumstances:

Creation of a differentiating property that, from the point of view of the buyer, does not reduce his costs or does not give him new advantages;

Excessive differentiation, when the price is much higher than the price of competitors, and the properties of the product exceed the needs of the consumer;

Too high price for additional properties;

Lack of consumer notification about new product properties;

Misunderstanding or ignorance of properties valuable to the buyer.

Focusinginvolves working with a limited group of segments within which differentiation or a low-price approach is implemented. Applying a strategy is acceptable when:

There is a segment of the market that provides profit;

There is no interest in the segment from the leaders;

The industry has a sufficient number of segments, which allows you to choose the most interesting.

Analyzing a company focusing its activities according to Porter's model, the following features can be distinguished:

A focused company purchases in relatively small volumes. But as long as it can increase prices for loyal customers, this disadvantage is not so significant;

There is a closer connection with consumers;

The niche for which a company operates may suddenly disappear due to changes in technology or consumer tastes.

Focused strategies provide an advantage when a company's costs are lower than those of the competition, and its products meet customer needs better than those of competitors.

The implementation of the strategy is associated with the following disadvantages:

There is a risk that the company will be crowded out by competitors;

The needs and requirements of a given segment may change;

The segment can be so attractive that it will attract the attention of many competitors.

Optimal cost strategy requires from the company the experience and the ability to simultaneously reduce costs and differentiate the product. The aim is to offer the consumer a product of high value that meets expectations in terms of essential properties and exceeds expectations in terms of price. The best-cost strategy ensures success in the presence of certain market conditions. In markets where buyers are accustomed to high product differentiation but are price sensitive, a cost-effective strategy is more effective than a cost leadership strategy or a pure differentiation strategy.

The concept and essence of competitive strategies

The strategy itself is a generalized model of the actions necessary to achieve the set goals through the coordination and allocation of resources of the organization. The strategy of the firm's behavior in the market in a highly competitive environment was named “ competitive strategy". The synthesis of the concepts "competition" and "strategy" is shown in Figure 1.

Figure 1. The essence of competitive strategy. Author24 - online exchange of student papers

Competitive strategies are reflected in the desire of businesses to gain competitive market positions in industries where rivals are fighting. As a rule, they are aimed at achieving stable and profitable positions that would allow businesses to resist the onslaught of forces that determine the competition in the industry.

Definition 1

Competitive strategy is the result of the choice by the firm's management of the methods and methods of conducting competition within the framework of behavioral strategies. It clarifies the main directions of the organization's activities, within the framework of which the value chain is formed relative to competitors.

The fundamental goal of a competitive strategy is considered to be suppression of competitors in terms of providing consumers with goods that are in high demand in the market.

Remark 1

A competitive strategy is always based on certain competitive advantages.

Competitive advantages are characteristics and properties of a product that create certain advantages for a company over competitors. In relation to consumers, they provide an optimal combination of consumer characteristics of goods or services.

Achieving competitive advantages is ensured through successful strategic actions of the company, protecting it from the effects of competitive forces and helping to become more recognizable in the market. They are conventionally divided into two types:

• internal;
• external.

The former are achieved and implemented by employees within the company, and the latter are formed in the external environment. Be that as it may, all firms can have only two types of competitive advantage - product differentiation or low costs. Basic types of competitive strategies are formed depending on the nature of competitive advantages and the degree of market attractiveness.

Classification of competitive strategies

According to M. Porter, there are three main types of competitive strategies that are universal and can be applied to achieve all competitive advantages (Figure 2). This approach is considered classic. Let's consider it in more detail.

Figure 2. Basic typology of competitive strategies. Author24 - online exchange of student papers

A cost advantage or price leadership strategy means the firm's ability to achieve the lowest cost level. The main options for its implementation are:

• setting the lowest selling prices and attracting all price-sensitive consumers;
• setting selling prices at the level of competitors.

The implementation of a price leadership strategy makes it possible to generate incomes above the industry average, even in a highly competitive industry. By earning a higher rate of return, the firm is able to re-invest it to maintain and develop product awareness, or set the lowest price for the product.

Focusing strategy or niche leadership means focusing all the efforts of a firm on a specific narrow consumer group. Its distinctive features are narrow specialization and limited sales markets among a small number of buyers.

Focusing strategies are of two types:

• cost focusing strategy;
• focusing strategy on differentiation.

The cost focus strategy assumes that the firm, operating in its target segment, strives to gain benefits at the expense of low costs. When using this type of strategy, the company differentiates in its target segment.

Product Leadership Strategy, otherwise known as differentiation, relies on the formation of a new product that is unique to the industry. The strategy of this type is based on the creation of a new product (service) with unique properties, or the improvement of an ordinary standardized product in order to sell it at a higher price and obtain a higher profit margin.

By applying a differentiation strategy, the organization endows its products with unique properties that are most important to the target audience, which, in turn, allows them to charge a higher price for the product. Differences and uniqueness of properties provide protection of goods from direct competition and pressure from substitute goods. Moreover, they build consumer brand loyalty and reduce their price sensitivity.

Each of the strategies presented predetermines a fundamentally different path to achieving the company's competitive advantages, which consist of a combination of the very choice of a certain type of sought advantages, as well as the scale of strategic goals, within which these advantages are planned to be obtained. Choosing a way to achieve a goal is a key decision about a strategy

Development of competitive strategies

The development of a competitive strategy traditionally begins with a deep analytical study of the internal and external environment organizations. In this case, a special role is assigned to industry analysis and study immediate environment firms.

Based on the analysis, based on the nature of the competitive advantages and attractiveness of the industry, the optimal (most suitable) type of competitive strategy is determined, its goals and objectives are formed.

Further, a marketing program is planned, and functional business strategies are formed (product pricing strategies, promotion and implementation strategies). On their basis, the planned marketing budget is built, the total cost of implementing the strategy of competition is determined. After that, a forecast of the company's performance is made.

This is where the preparatory stages end, and the turn of the direct implementation of the competitive strategy begins. Its implementation, in turn, requires constant monitoring and control. Based on the results of the implementation of the strategy, the results are calculated and evaluated.

“In order for a company to generate stable and growing income, it needs to achieve leadership in one of three areas: in product, in price, or in a narrow market niche,” said Michael Porter, presenting his theory of effective competition to the world. In this article, we will consider the basic competitive strategies of an enterprise according to Porter and propose an action plan for a company that has not yet determined the strategic direction of business development. Each type of competitive strategy we've reviewed is actively used in marketing around the world. The presented classification of competition strategies is very convenient and suitable for a company of any size.

Michael Porter is the leading professional in competition strategy. Throughout its professional activity he was engaged in the systematization of all models of competition and the development of clear rules for conducting competition in the market. The figure below shows the modern classification of competitive strategies according to Porter.

Let's understand the concept and essence of a competitive strategy for business. Competition strategy is a list of actions that a company takes to generate higher profits than its competitors. Thanks to an effective competitive strategy, the company attracts consumers more quickly, incurs lower costs of attracting and retaining customers, and receives a higher rate of return (margin) from sales.

Porter identified 4 types of basic competitive strategies in the industry. The choice of the type of competitive strategy depends on the capabilities, resources and ambitions of the company in the market.

The matrix of Porter's competitive strategies is based on 2 parameters: the size of the market and the type of competitive advantage. Market types can be broad (large segment, whole product category, whole industry) or narrow (small market niche that accumulates the needs of a very narrow or specific target audience). The type of competitive advantage can be of two types: low cost of goods (or high profitability of products) or a wide variety of assortments.

Based on this matrix, Michael Porter identifies 3 main strategies for the company's competitive behavior in the industry: cost leadership, differentiation, and specialization:

A competitive product leadership or differentiation strategy means creating a unique product in the industry;
Competitive cost leadership or price leadership means the ability of the company to achieve the lowest cost level;
A competitive focusing strategy or niche leadership means focusing all of a company's efforts on a specific narrow group of consumers.

This classification of Porter's competition strategies is very general and suggests that a business should choose the type of competition that will become the basis for making decisions in the field of assortment, prices, packaging, promotion and distribution of goods. After choosing the key direction of the competitive strategy, it is necessary to develop the principles of the strategy.

A firm that does not choose a clear direction for a competitive strategy - “gets stuck in the middle”, does not work effectively and operates in an extremely unfavorable competitive situation. A company without a clear strategy of competition loses market share, ineffectively manages investments and receives a low rate of return. Such a company loses buyers interested in a low price, so it is not able to offer them an acceptable price without losing profits; and on the other hand, it cannot get buyers interested in the specific properties of the product, since it does not focus on the development of differentiation or specialization.

If your company has not yet decided on the vector of a competitive strategy, then it is time to rethink the key goals and objectives of the business, assess the resources and capabilities of the company and go through 3 consecutive steps:

1. Make a fundamental decision and choose one of the directions of the strategy, based on the capabilities, strengths and weaknesses of the product.
2. Develop a sustainable competitive advantage or USP of the product that will emphasize the chosen direction of competition.
3. Identify key competitors from whom it is planned to take market share, and competitors that pose a threat to the company; and formulate a tactical action plan to increase the competitiveness of the business.

Competitive advantage strategy

Competitive strategies are key to market success. Therefore, in order to gain the best market positions, build a brand and achieve advantages in relation to competitors in the market, strategy should be used as the basis for obtaining benefits from a competitive advantage.

There are the following strategies to create a competitive advantage.

Cost leadership strategy. In this case, when developing and manufacturing a product, the focus is on costs. This strategy is also known as Price Leadership.

It is a strategy based on internal competitive advantage and is based mainly on the organizational and production know-how of the company.

To create cost advantages, they practice:

Reducing unit costs by increasing production volumes, thus achieving economies of scale.
Rational business management, optimization of intra-company communications.
Savings on variety in the production of various products.
Integration of distribution networks and optimization of supply systems.
Branch network, which due to the convenient geographical location of the company, allows you to reduce the cost of production through the use of local characteristics.

Cost leadership strategy, its advantages and disadvantages: This strategy can be used by large companies that have large market shares.

A company that has chosen this path must achieve leadership in one of the following ways:

Create production facilities on an economically efficient scale;
reduce costs based on accumulated experience;
tighten control over production and overhead costs; * avoid small transactions with customers;
get special access rights to sources of raw materials;
minimize costs in areas such as research and development, service, distribution, advertising and other marketing communications.

Applying this strategy gives the company the following benefits:

Protection from suppliers;
protection from product buyers (they can bring down prices only to the level of competitors' prices);
obstacle for competitors to enter the market;
advantageous position in relation to substitute products.

The disadvantage of the strategy is that there is a serious problem of further price increases while maintaining the size of the captured market. There is also the danger that competitors will take advantage of the leader's technology or cost management techniques and win. Strategy can be an effective response to the actions of competitors, but it does not guarantee failure.

Differentiation strategy When they try to give a product certain distinctive features, some unusual functional properties, unique characteristics, what the buyer may like, has demand, value for the consumer and what he is willing to pay for, even if similar products of competitors will cost more.

These are strategies arising from external competitive advantage, its superiority in identifying and meeting the expectations of buyers who are dissatisfied with existing goods. In other words, they are aimed at putting on the market goods or services that are more attractive in terms of their qualities in the eyes of consumers than competing products.

Only at the expense of the price new strategy it is impossible to create a competitive advantage. There must be a certain pricing limit below which it is impossible to fall below in order to avoid financial losses and maintain profitability. While the quality of a product can be improved indefinitely, if only it differs more favorably in quality from similar products.

However, it should be understood that the cost leadership strategy and the differentiation strategy should be carried out independently of each other, it is not necessary to implement them simultaneously. More often than not, companies use a differentiation strategy to raise prices, because differentiation leads to higher production costs. As a result, the profit increases slightly, but not necessarily.

At the same time, differentiation with the maintenance of prices always contributes to an increase in sales due to the number of products sold or due to stabilization of consumer demand.

Differentiation strategy, its advantages and disadvantages. Differentiation can be carried out in various forms or combinations thereof:

Design or brand prestige;
special technology;
functionality;
customer service conditions;
dealer network;
other parameters.

In this situation, brand loyalty forms among consumers, and it is not easy to find substitutes for products offered by firms pursuing differentiation strategies. Also, there are financial reserves for finding alternative sources of input resources.

But for all the attractiveness of this strategy, it has several disadvantages. Differentiation requires a certain increase in costs, which arise for the following reasons:

Investment in research and development is increasing;
the cost of design and the quality of customer service increases;
more expensive raw materials are purchased;
customer tastes and preferences can change over time.

Focus strategy or focusing on the interests of specific consumers. This is a strategy in which the company purposefully targets a certain group of consumers, or a limited part of the product range, or a specific geographic market.

This strategy is advisable if there is a goal to satisfy some unusual need of a certain group of people by creating and promoting a specialized product to the market. It is also possible to create a specific system of access to a product, for example, an innovative system for selling or delivering a product, and thus create a competitive advantage.

Likewise, this strategy can be “augmented” with a pricing strategy and a differentiation strategy, but not made interconnected.

Diversification of production. This strategy involves:

Simultaneous expansion of types of production that are not related to each other,
- expanding the range of products manufactured at one enterprise,
- expansion of the market activity of the enterprise,
- using your own financial resources not only for the maintenance and development of the main business, but also for the development of new types of activities, the creation of new industries.

The diversification of production contributes to the transformation of the company into a complex multifunctional complex, as a result of which the enterprise acquires greater resistance to fluctuations in the market environment, improves and adapts its products to changing conditions and demand, and provides the required level of profitability.

Pioneer strategy. The essence of this competitive advantage lies in the fact that a particular entrepreneur is the first and only manufacturer or supplier of goods or services in a particular market, region or area.

It is not necessary to create a new product from scratch to become a “pioneer”. It is possible for an old product to develop and implement new technologies, upgrade existing tools or mechanisms, or quickly understand and respond to new consumer needs and demands.

Stuck in the middle position. The company can choose any of the strategies. Porter believes that each of them is an effective way to counteract competitors, but advises to focus on only one. Otherwise, the company runs the risk of being stuck in the middle, which will inevitably lead to loss of market share, low margins, inconsistent organizational structures and weak motivation.

Enterprise competitive strategies

Competitive strategy is a generalized model of actions and a set of rules that should be followed by an enterprise when making decisions to achieve and maintain long-term competitiveness.

The strategy sets a certain framework for identifying and assessing changes in the external and internal conditions for the development of the system and the needs for its improvement caused by these changes.

Strategy as a means to achieve long-term goals focuses on forecasting the behavior of the external environment and, in this regard, the analysis of the possibilities of the functioning and development of the enterprise. The strategy is adaptive to changes in the external environment and mobilizes the resources of the enterprise, directing them to achieve the set goals.

In accordance with the above classification features, the following are distinguished.

Whenever possible, strategies are distinguished - typical and original.

Depending on the level of management, strategies are distinguished: corporate, business, functional and operational.

Corporate strategy is the overall strategy of the corporation as a whole.

The business strategy aims to establish and strengthen the company's long-term competitiveness in the market.

The functional strategy is carried out across the enterprise in the selected functional areas: marketing, personnel, finance, etc.

The operational strategy is implemented on the scale of individual divisions of the enterprise: advertising, cost centers, etc.

Depending on the type of functioning, competitive strategies of commutators, patents, violets, explents, litalent are distinguished, which reflect a specific type of biological behavior of an enterprise and have a corresponding analogy with the behavior of biological systems.

Commutators, or "Gray Mice", are small, agile enterprises that adapt easily to change market demand... Often they offer imitation goods (services), counterfeit goods (services), are not firmly tied to a specific field of activity, and easily move from one market to another. Low market stability. Flexibility and adaptability are at the core of this competitive strategy.

Switches can be medium or small businesses that have experienced the peak of their efficiency, more focused on stable limited demand and services than on innovation and individualized approach to customers.

Patents, or "Sly Foxes", are highly specialized enterprises with quantitative growth (personnel, communications, departments) that have mastered one of the niches (areas of needs) of the market. Not very large enterprises that have been producing goods and services of a certain type for many years. Competitive strategy is based on narrow specialization, low costs and high quality of goods (services).

Violents, or "Elephants", "Lions", are giant enterprises that have reached the most stable position in the market and exercise control over a significant share of the market. Competitive strategy - low costs due to a large scale of activities and satisfaction of massive customer demand.

Exporters, or "Moths", are start-ups, emerging enterprises, whose competitive advantage is innovation, new technologies and goods (services). They are weakly connected with the market, do not have enough funds for its development, wide marketing activities. They effectively act as venture divisions of large enterprises or their subsidiaries. The basis of activity is new ideas, external financial support.

Litalents, or "Dying", are enterprises with an unnecessarily complicated, ineffective structure, recession financial indicators... They need a quick re-profiling for new business, new technologies, new markets, orientation towards destructuring and refinancing.

There are strategies determined by the position of the enterprise in the competitive struggle: offensive, defensive.

An offensive strategy is typical for enterprises that base their activities on the principles of entrepreneurship. A fundamentally new product (service) or technology that brings competitive advantages is being designed and implemented.

The defensive strategy is aimed at keeping the competitive position of the enterprise in the already mastered sales markets. The main function of the strategy is to activate the cost-benefit relationship with its own benefits and benefits for buyers. With such a strategy, the competition is conducted not by the originality of the product (service) or technology, but by their price, volume of supply and quality.

Based on the analysis of the forces of competition, Michael Porter identified three basic competitive strategies with universal applicability, with the help of which an organization can secure a competitive advantage: cost leadership, differentiation, focus.

1. Cost leadership creates protection against all five forces of competition:
the company is able to make a profit at the minimum acceptable price for competitors;
low costs create an entry barrier for new competitors and substitute products;
low costs protect the company from the actions of strong suppliers, providing more flexibility in the event of price increases;
strong consumers are unable to push prices below the level acceptable to the strongest competitor.

Low-cost leadership is effective under the following conditions:

Price is the dominant competitive force;
industry product - standardized, easy to manufacture;
lack of opportunities for differentiation;
"big" buyers have significant trading power.

Low-price leadership has the following risks:

Technological changes that devalue previous experience and investments;
the ability to copy the competitive advantages of cost leadership by competing enterprises;
inability to make changes to the product on time due to exaggerated attention to costs.

2. Product differentiation is aimed at buyers who are willing to pay more, but for higher quality or more. wide choose consumer qualities of goods (services).

Differentiation can be horizontal (differences in goods or services by individual characteristics, the price is approximately the same) and vertical (the offered characteristics of goods or services, their prices and the average solvent income level of consumers are different).

Differentiation also protects the enterprise from five competitive forces, but in a different way:

In relation to competitors, differentiation reduces the possibility of product substitution, increases consumer loyalty to the brand, reduces price sensitivity and thereby increases profitability;
the distinctive properties of the product and the gained loyalty of customers protect the enterprise from substitute products;
increased cost-effectiveness increases resistance to possible increase strong supplier prices.

Differentiation is attractive under the following conditions:

There are many ways to differentiate a product;
the organization has production or marketing know-how;
the needs of potential consumers differ;
few competitors in the industry are following a similar path of differentiation;
demand is price inelastic;
the industry market has a complex structure.

Differentiation can be inherent in the following:

The gap in prices for a differentiated product (service) relative to competitors with low costs is so large that it is not possible to maintain brand loyalty;
the role of the differentiation factor decreases as the product (service) becomes familiar;
the perception of differentiation is reduced by the influence of counterfeits and imitations.

3. Focusing - focusing efforts on any market segment, consumer niche, characterized by special needs, with the aim of better than competitors' satisfaction. This strategy can rely on cost leadership, or differentiation, or both, but within the target market segment.

Focusing is attractive when:

It is too expensive or difficult for most competitors to master this niche;
the company does not have enough resources to develop broad market segments;
industry segments differ significantly in size, growth rate and intensity of competitive pressure;
there are relatively small groups of clients with non-standard needs that are not fully met.

Focusing risks include:

The price gap in comparison to non-specialized competitors is becoming very large;
differences in the requirements for the goods of consumers of the target market segment and the market as a whole are reduced;
competitors enter even narrower sub-segments within the target segment.

Depending on the life cycle development of goods (services) or enterprises distinguish the following strategies: concentrated growth, integrated growth, diversified growth, targeted reduction.

Concentrated growth strategies. This group of strategies includes:

The strategy of strengthening the commodity position with an already mastered service (or a package of services) in an already mastered market, for example, through additional marketing or advertising efforts;
strategy of searching for new sales markets for an already produced service (service package);
strategy of developing a new service (package of services) in an already developed sales market.

Integrated growth strategies. This group of strategies distinguishes between:

Reverse vertical integration strategy (integration with suppliers of resources required to produce a service);
Forward integration strategy (integration with distributors, sales resellers and sales organizations).

Diversified growth strategies. Strategies with the following types of diversification are distinguished here:

Concentric diversification strategy (search for additional opportunities for the production and implementation of new services on the existing base of the old business; it remains in the center of the business);
horizontal diversification strategy (production and sale of new packages of services, different from those used in the already developed sales market);
strategy of conglomerate diversification (the organization is expanding through the production and sale of new packages of services that are not technologically related to those already produced; new services are sold in new markets).

Targeted reduction strategies. These strategies are used when an organization needs to regroup its forces after a long period of growth due to the need to improve efficiency during market downturns and dramatic changes in the economy. Their use is not painless for the enterprise. At the same time, certain variants of these strategies are considered as business renewal strategies.

Harvesting strategy (reducing procurement and labor costs, maximizing short-term income from selling available services);
reduction strategy (closure or sale of divisions or businesses that do not fit well with the rest);
cost reduction strategy (development of a number of cost reduction measures);
business liquidation strategy.

The firm's competitive strategy

According to the so-called biological approach proposed by the Russian scientist L.G. Ramensky, distinguish between strategies for ensuring the competitiveness of an organization: violet, patent, commutative, exploitative (table below).

Violent strategy assumes mass production and delivery to the market of products of acceptable quality for consumers at low production costs, which allows manufacturers to set low prices based on a significant volume of demand. Violent strategy is typical for large companies that dominate the market and outstrip competitors due to low production costs (and, consequently, low prices) and high labor productivity, which is possible when organizing mass (large-scale) production of goods aimed at the average buyer. Violent strategy can be carried out by large organizations with a stable reputation that have gradually mastered significant market segments.

Characteristics of the types of competition according to L.G. Ramensky:

Strategy characteristics	Strategies
	violet	patent	commutative	explicate
Needs orientation	mass standard	relatively limited, specific	local limited	innovative
Production type	mass, large-scale	specialized, serial	universal, small batch	experimental
Company size		large, medium, small		medium, small
Competition level
Stability of the company in the market environment
Relative share of R&D spending			absent or small	high, prevailing
Competitive advantage factors	high productivity, low unit costs	benefits from product differentiation	flexibility	being ahead in innovations
Development dynamics	high, medium
Type of innovation	ameliorating	adaptive	is absent	breakthrough, pivotal
Range				is absent

The patent strategy is to serve narrow market segments with specific needs through the organization of specialized production of products with unique characteristics, designed to conquer and retain relatively narrow market niches, within which exclusive special-purpose goods of very high quality are sold. Manufacturers and sellers of such goods sell them on the market at high fines for wealthy buyers, which makes it possible to make significant profits with small sales volumes.

Competitiveness is achieved by the refinement of the product that satisfies delicate tastes and demands, quality indicators that surpass the quality of similar products of competitors. The commuting strategy is designed to satisfy not rare, but rapidly changing, short-term needs of consumers for goods and services. The commuting strategy is aimed at adapting to the limited demand of the local market, meeting rapidly changing needs, and imitating new products. Therefore, the commutative strategy is characterized, first of all, by high flexibility, which makes special demands on the restructuring of production for the release of periodically updated products. Typically, this strategy is followed by non-specialized organizations with fairly versatile technologies and limited production volumes, when the implementation of this strategy does not set the task of achieving high quality and selling at high prices.

An exploratory strategy is focused on radical innovation and market entry with a new product. An exploitative strategy relies on achieving the organization's competitive advantages through the implementation of constructive and technological innovations that allow it to stay ahead of competitors in the release and supply to the market of fundamentally new types of products by investing in promising but risky innovative projects. Such projects, if successfully implemented, allow not only surpassing competitors in terms of the quality of products presented on the market, but also creating new markets, where for a certain time they may not be afraid of competition, since they are the only manufacturers of a unique product. Implementation of such a strategy requires significant initial capital, research and production potential, and highly qualified personnel. Innovation is one of the radical means of gaining competitive advantage, contributing to market monopolization. Discoveries, inventions and other innovations create a new market with the prospect of rapid growth and great opportunities for the company. The vast majority of modern market leaders have emerged precisely as a result of the development and use of innovations leading to revolutionary changes in the market situation. An example is the leaders in the aviation, automotive, electrical industries, as well as in the field of computer technology, software development, which arose from small pioneer enterprises, whose innovations literally "blew up" existing markets.

The main advantage of the innovation strategy is blocking the entry into the industry of competitors (for a certain period of time) and guaranteed high profits. The lack of substitute products and the high potential demand for innovation create a favorable market environment for the innovative company.

However, as experience shows, due to the high risks caused by the market's unwillingness to accept innovations, and in some cases by technical and technological imperfections and lack of experience in replication and other reasons, 80% of these companies go bankrupt. But the prospects of becoming a leader in the industry, in the market and the associated economic advantages create an incentive for the development of innovative activities.

Enterprises implementing an exploratory strategy, as a rule, have highly qualified personnel, a project management structure, and a venture business organization at the initial stages of the innovation process.

The prerequisites for the application of such a strategy: lack of analogues (products, technologies, etc.); the presence of potential demand for the proposed innovations.

The advantages of an exploratory strategy:

Blocking entry into the industry during the duration of the rights to innovate;
the possibility of large volumes of sales and receiving super profits. Risks of an exploitative strategy:
great uncertainty about the commercialization of the innovation;
danger of imitation, rapid development of similar products by competitors;
unwillingness of the market to accept innovation;
lack of distribution channels for new products;
design, technological and other flaw of the innovation.

Development of a competitive strategy

Competitive strategy is a tool in the hands of enterprise managers that allows them to achieve their goals. In order for the competitive struggle to be conducted deliberately, it is necessary to develop a competitive strategy, draw up a plan for its implementation and analyze the results of the implementation of the plan. The developed plan for the implementation of a competitive strategy helps all employees of the organization to clearly understand what function they should perform when working with each market segment and how to behave in response to certain actions of competitors. In other words, it creates conditions for coordinated work of managers of different departments to achieve common corporate goals. And on the market, the company's actions become interrelated and purposeful.

The general idea of \u200b\u200bdeveloping a competitive strategy is an action program that allows you to get a positive economic effect due to the fact that the company is in a stronger competitive position.

The function of competitive strategic planning in an enterprise is carried out using basic principles, that is, the rules for the formation and implementation of a strategy in the market:

Continuity and accumulation;
the sequence of steps (stages) performed;
cyclicality.

The continuity of the competitive strategy lies in the fact that the enterprise, even before developing the strategy, must analyze the previous experience, find out what actions were useful in the competition and check their relevance to the current moment. In addition, learning from past experience will enable an enterprise to avoid old mistakes when developing a new strategy.

The sequence is caused by the dependence of the subsequent stage on the results obtained in the previous one. This will allow avoiding the inconsistency between the competitive strategy and the market situation, mistakes that have already occurred in the past, and assess the results obtained during the implementation of the strategy.

Competitive strategy is an important tool in the hands of managers, as it is aimed at solving a number of problems and problems faced by the company:

First, the available analytical material, obtained and structured in the course of strategy formation, allows both management and performers to clearly see the situation on the market, the company's position on it, the reality of goals and ways to achieve them.
- Secondly, the competitive strategy approved by the company's management acquires the force of an organizational and administrative document, that is, it allows concentrating forces in the necessary direction.
- And finally, thirdly, by analyzing its activities in past periods, the company can constantly improve and expand its scope of activity, adequately respond to market changes, strengthen its market position and conquer new markets.

Nowadays, practitioners often have to deal with a situation where there is a gap between the theory of competitive strategies and the practice of its application in the enterprise.

According to the proposed algorithm, the development and subsequent implementation of a competitive strategy is carried out by sequentially performing eight main stages:

1. Mission and general corporate development strategy of the enterprise.
2. Formulation of tasks in the competitive struggle in the market.
3. Collection and analysis of information about the external and internal environments of the enterprise.
4. The choice of the competitive strategy of the enterprise in the market.
5. Analysis of the chosen strategy.
6. Implementation of a competitive strategy through a developed plan.
7. Analysis of the results of the strategy implementation.
8. Correction of the existing strategy or the development of a new, more effective strategy that will be able to implement the tasks set by the general corporate strategy of the enterprise.

It is important to note that since the competitive strategy is lower in the hierarchy of strategic planning than the general corporate strategy of enterprise development, it makes sense to start developing a competitive strategy after the end of work on the general corporate strategy of enterprise development.

Due to the fact that the development and implementation of a competitive strategy affects various services and functional units, it is logical to divide the algorithm into phases.

All eight stages are divided into three phases:

Preparation phase (stages 1 and 2).
Development phase (stages 3, 4, 5).
Implementation phase (stages 6, 7, 8).

The preparation phase is under the responsibility of the Department of Strategic Planning and corporate development, or a functional unit responsible for these areas (stage 1). The developed general corporate strategy of the enterprise is presented to the protection of the management and owners of the enterprise, who, as a whole, for the enterprise finally determine the priority tasks in the competition (stage 2). The preliminary tasks in the competitive struggle in the market are formulated in accordance with the corporate goals and directions of the enterprise development.

At this stage, it is necessary to determine the nature of the competitive struggle (for example, offensive or defensive), who exactly needs to be squeezed in the market, to whom (for example, competitor "A") you can force to divert your resources from market "a" by switching it to given market and weakening its position in the strategically important market (b)). This approach allows you to compete globally through local clashes with specific competitors. It should be remembered that only the hierarchy of strategic planning at the enterprise (general corporate strategy - competitive strategy in the market) allows effective global competition. This approach has now become especially relevant - a global market has formed, and interstate borders have become almost transparent for capital, goods, labor resources... As a result, a change in the situation in one market can have an impact on another market, and, accordingly, on its participants.

In the development phase, the tasks that have been formulated by the management of the enterprise are conveyed to the functional unit responsible for marketing and sales. In the future, the analysts of this division analyze the market, while the key positions of the analysis are the intensity of competition in the market and the competitive position of the enterprise (stage 3). Based on the analysis, a suitable competitive strategy is selected (stage 4). Further, this strategy is analyzed from the point of view of compliance with the general corporate objectives, which were formulated by the management, as well as from the point of view of the enterprise's capabilities. Marketing competitive strategy, as noted above, is determined based on external factors (analysis of environmental conditions) and internal factors (available resources of the firm). In order to get a clear assessment of the internal capabilities of the enterprise and the market situation, you can use the SWOT analysis.

The use of SWOT analysis is necessary for the systematization of available information and subsequent management decisions. Therefore, SWOT analysis can be called an intermediate link between the formulation of a competitive strategy of the enterprise and the development of a competitive plan (stage 5).

Everything happens in the following sequence:

1. Determination of the main competitive strategy of the enterprise in the planning period.
2. Comparison of the internal forces of the company and the market situation in order to understand whether the company will be able to implement the selected competitive strategy, and how it can be done (SWOT analysis).
3. Formulation of goals and local tasks, taking into account the real capabilities of the enterprise (development of a competitive plan).

As another criterion for assessing and adjusting the chosen competitive strategy, managers need to consider the corporate goals of the enterprise, which are based on the mission and overall development strategy. This agreement is necessary so that the chosen competitive strategy in a particular market does not have a negative impact on the development of the enterprise as a whole. For example, an attack on competitors (with the aim of displacing them from the market) or the takeover of some of them can significantly increase the company's market share, but at the same time exceed the antitrust regulations or the costs incurred will not be able to pay off.

If the competitive strategy meets all the requirements, the process of developing a competitive strategy moves into the implementation phase. In this phase, the developed strategy is implemented - the marketing and sales specialists of the enterprise act on the market in accordance with the approved strategy (stage 6). The main difficulty at this stage is that it is necessary to competently implement the developed strategy and then evaluate its effectiveness.

The implementation of this task can be helped by a plan for the implementation of a competitive strategy, the structure of which is proposed below:

1. Summary. This section of the Competition Plan is finalized and in its final form should begin with the formulation of goals, a description of the strategy and a short plan of action to achieve the goal and implement the strategy. A summary that helps management quickly grasp the main points of the plan.
2. Description and analysis of the current market situation. Brief political and economic situation of the region / country market. Analysis of the market and consumers of goods in a given region / country.
3. Description and analysis of competition in the market. Analysis of competitors' activities. Analysis of the competitive position of the enterprise in the market. Assessment of the intensity of competition in the market.
4. Results of the previous period. Actual and planned results of the previous period. Analysis of the results of the past period. Description of the reasons for the failure or overfulfillment of the plan.
5. Setting goals and describing the chosen strategy. Competitive strategy is determined by the results of research of the competitive environment and the position of the enterprise in the market.
6. Evaluation of the chosen competitive strategy. The assessment of the chosen strategy is based on an analysis of the external environment and internal capabilities of the enterprise (SWOT analysis). In addition, the selected competitive strategy must be reviewed for alignment with corporate objectives. Here you should also characterize the chosen competitive strategy, give a description necessary conditions successful implementation of the competitive plan and possible reasons that may interfere with its implementation.
7. Implementation plan for the selected competitive strategy.

In this section, it is necessary to state:

A. Quantitative targets that define the absolute numbers of sales and relative growth rates. At the same time, these indicators must be expressed both in the number of units of goods (attracted new customers) and in monetary terms. Another important baseline indicator for the planning period is the company's market share, which is planned to be occupied by the end of the period.
B. A set of measures and actions to achieve the goals. Competitive strategy is considered in accordance with the marketing mix (four "I" - product, price, distribution, promotion). This circumstance allows it to be successfully implemented by accurately distributing tasks and functions between various departments of the company, as well as to subsequently analyze the effectiveness of the competitive strategy after the planned period. In the events, it is necessary to take into account such points as the need for testing, standardization, presentations, sending specialists for specific purposes (conducting market research, conducting negotiations, participating in exhibitions, providing and developing service, etc.). Each event is assigned a deadline, as well as specific performers.

8. Budget for the planning period.

The required amount of funds allocated for the implementation of the competitive strategy is analyzed.

It is well known that any activity must begin with planning, long before the moment the first step in the chosen direction is taken. The main task of the competition plan is not only to indicate the direction, but also to describe the route, the procedure for achieving the set goals - conducting research of competitors, preparing response actions and their implementation. Thus, the competitive plan discussed above is an applied tool for the development and implementation of competitive strategies in an enterprise.

At the end of the reporting period, the results obtained in the course of implementing the competitive strategy are analyzed, and the effect obtained is determined (stage 7). At this stage, the competitive plan plays the main role, which, in fact, is the source of the accumulation of experience by the enterprise. By analyzing its activities in past periods, the company can constantly improve and expand its scope of activity, adequately respond to market changes, strengthen its market position and conquer new markets.

Key questions to be answered:

The correctness of the chosen strategy?
the reaction of competitors?
the correctness of the planned activities and correlate the results obtained and planned?
the effectiveness of the tasks assigned?
to highlight successful and unsuccessful approaches, methods, ideas?

If the competitive strategy turned out to be effective and has positive results for the company, then the issues of its adjustment and relevance are considered in the following reporting period... After that, an updated competitive plan with new goals is developed (stage 8). If the competitive strategy did not have a positive effect or had negative consequences, the reasons are determined and a new competitive strategy is developed.

Often, a competitive strategy is something isolated in strategic planning at an enterprise, meanwhile it is directly integrated into it and is its integral part. The presented step-by-step algorithm for developing a competitive strategy and a plan for implementing the developed strategy make it possible to establish a closed cycle of competitive strategic planning.

Competitive strategies

Competition is a given that any business must take into account. Competition for the end customer on the market is ongoing, it uses all the possible tools and resources of the company. A company that does not compete, does not oppose competitors, is doomed to lose market share. In this article, we will analyze in detail the concept of "competition" and talk about the most common strategies and methods of competition in the market. Consider both price and non-price methods of competitiveness in the industry.

Competitive struggle is actions aimed at retaining and growing a company's market share. The minimum goal of competition is to retain current customers and prevent them from switching to competitors. The ultimate goal of competition is to take buyers away from the company's main competitors.

In order to effectively resist competitors, it is necessary to consistently go through all the stages of the competitive struggle:

Define target audience and main competitors;
Determine a competitive advantage and develop a strategy for its strengthening and development;
Establish the main competitive strategy for the industry;
Develop tactics to counter major competitors.

The basic rules of competition are 3 sentences: do not harm the market, do not harm yourself, work within the law. All actions directed against competitors should not lead to a collapse and decrease in the size of the market in which your company operates. All actions directed against competitors should not lead to a decrease in the profitability of your business in the long term. You must use legal means to compete and comply with legal regulation countries.

So, let's move on to describing all the possible tools of competition. Competition does not always mean aggressive working methods and tough opposition. Competitive struggle can be both active and passive. In relation to competitors, a company can use 2 main tactics of competitive struggle: preemptive (offensive) actions, or passive actions.

Types of competitive strategies	Description of strategies
Offensive strategies	Actions aimed at actively opposing the main competitor in order to capture market share. Having chosen this method of competitive struggle, the company focuses on confronting a certain group of competitors and takes any action to attract competitors' buyers to its product.
Passive strategies	Actions aimed at a peaceful existence in the market and increasing the company's profitability with a slight increase in market share. Having chosen this type of competition, the company begins to look for ways of peaceful existence with large competitors and focuses on small free niches in the market.

The way in which a company chooses to face off against competitors depends on the size of the business and the resource capacity of the firm. In this article, we will consider the main types of competitive struggle, with the help of which any company can win even in the conditions of the most severe competition in the industry.

As we have said, the goal of proactive or offensive competitive strategies is to challenge the market leader and subsequently gain market share. In global practice, there are 5 offensive strategies of competitive struggle: frontal attack, flank attack, encirclement, focus on niches and bypass. Let's consider each of them in more detail.

Frontal attack. Frontal attack strategies mean using the same means against a key competitor that he himself uses to develop his product, but with greater intensity. Higher intensity allows you to achieve superiority over competitors (in price, product, advertising), which must later be translated into a competitive advantage. A frontal attack does not exploit a competitor's weaknesses.

In other words, if your competitor attracts the majority of new customers through advertising, you start using the same communication channel in order to make it less visible or completely invisible in this channel. If your competitor launches a new product, you release an alternative proposal that is better product competitor.

Flank attack. Flanking strategy - using one of the weaknesses of the leader to achieve competitive advantage. For example, increased activity in a separate region, a sales network, where a competitor has a weaker position. A common example of a flank attack is offering a product comparable to the leader, but at a lower price. Environment. The encirclement strategy involves the gradual accumulation of advantages by examining the weaknesses of the main competitor. It is very time consuming, but ideal for small companies. The encirclement is very comparable to a flank attack, but is carried out more consistently and invisibly.

Concentration of forces on individual segments. This strategy implies focusing all efforts on segments that are not attractive to key players. It is usually unprofitable for large leaders to concentrate their efforts on such segments due to the loss of the main share.

Bypass. A bypass strategy means avoiding competition by releasing products that do not compete with those of key competitors.

The goal of passive strategies is a peaceful existence in the market and a conscious division of the market. The actions of passive strategies should not cause resistance from the main market players.

Passive strategies are very often used by small firms and have a number of features:

Focus only on specific market segments and never aim to cover the entire market;
should focus on the development of technology only in the direction of reducing costs and basic costs;
focus on profit, not sales and market share.

A strategy for copying successful products. Also called the "false mushroom" strategy. It consists in creating a "complete copy" of a successful product and selling it at a more attractive price. Used when a company is able to create a complete copy of a competitor's product.

Small market strategy. Strategy means creating an original / unique product for a narrow segment of the market (comparable to the niche leadership strategy in Michael Porter's models of competition) Small market strategy is the most commonly used passive strategy. Saving positions. The strategy is to maintain a consistent market performance without attracting the attention of major competitors.

Participation strategy. Participation strategy means the company's involvement in the production of the product of the main competitor. For example, firms that produce covers for car companies.

Franchising. The strategy is that a small firm creates a product similar to that of a large company and concludes with a large company franchise agreement, while maintaining the ability to exist in the market.

Types of competitive strategies

Any business strategy, in order to be successful, must be based on the competitive advantage achieved by the company. A company has a competitive advantage if its position is characterized by a more advantageous position relative to competitors in the competition and attracting buyers. There are many different competitive advantages: the advantage of higher quality goods, the provision of a wider range of services to customers, the sale of goods at relatively low prices, a more favorable geographic location, the production of goods that have no equal analogues, the production of more reliable and durable products, the provision of more services per purchase (high quality combination, good service and reasonable prices). Whichever strategy a company chooses, if it seeks to achieve a competitive advantage, it must draw the attention of consumers to its products by providing more "value" than the customer expects. Additional “value” is created in one of two ways: either by providing customers with quality products at lower prices, or by providing products “of better quality” than customer ratings suggest, even with a premium margin.

This topic is about how a company can gain and maintain a competitive advantage. The main types of competitive strategies are first examined and how they lead to market advantage positions.

Competition strategy is a set of specific steps and approaches that a firm takes or is about to take in order to successfully compete in a given industry. Or the same, but in simpler terms, a firm's competition strategy shows how the company's management tries to soften the blows of competitors and thus, withstand the destructive action of the five forces of competition. Depending on the situation, the strategy can be predominantly defensive or predominantly offensive.

Companies around the world are armed with truly fantastically worked out all conceivable and inconceivable ways of gaining market advantage. In this sense, there are as many competitive strategies as there are competing firms.

However, discarding all the nuances, there are three main strategic approaches to the competition:

1. Striving to have the lowest production costs in the industry (strategy of the leading role in the field of production costs).
2. Search for ways to differentiate manufactured products from competitors' products (differentiation strategy).
3. Focusing on a narrow part, not the whole market (focus strategy, or niche).

The incentive to have the lowest production costs in the industry is the presence of a large number of price-sensitive buyers in the market. The idea is to gain a sustainable cost advantage over competitors and use that as the basis for price dumping and market share gains, or higher profit margins when selling goods at prevailing market prices. Cost advantage can only translate into higher production margins if it is not wasted in undercutting competitors' prices to increase sales accordingly. Taking the lead in production costs means making the goal of reducing costs a leitmotif of the firm's overall strategy - although this does not detract from other success factors.

To have a cost advantage, a firm must achieve the lowest total cost of production.

There are two main ways to gain a competitive advantage in this area:

Purposeful work to reduce costs and increase production efficiency;
revising the complete cost structure and eliminating the most expensive and least efficient technological operations.

Both approaches should be carried out simultaneously. Typically, low-cost manufacturers try to take advantage of every cost-cutting opportunity that presents itself. Their activities fit into the framework of a special administrative culture: Spartan equipment, meager tips, low bonuses to managers, intolerance to waste, meticulous review of the organization's budget, the introduction of a system of wide participation of employees in reducing production costs. But even though they are extremely frugal in spending money, companies of this type do not skimp on investing in resource-saving technologies.

A firm claiming to be a low-cost producer must carefully consider each step in cost increment.

Then she should use whatever she learns about the reasons for the increase in costs and be creative in finding ways to reduce them. Wherever possible, production operations, the execution of which leads to a sharp increase in costs, should be abandoned. As a result of these types of activities, the company can achieve tremendous success in reducing production costs. Illustrative Box 10 shows the story of two companies gaining a strong competitive edge by redefining traditional industry cost structures.

As an example of firms that successfully implement strategies to reduce production costs, we cite Lincoln Electric for the production of arc welding equipment, Briggs and Stratton - small internal combustion engines, BIK - ballpoint pens, Black and Decker - tools, Design Manufakchurin - dishwashers (known on market under the SIARS KENMOR brand), Beard - Pulan - chain saws, Ford - heavy vehicles, General Electric - a variety of household appliances, VOL-MART - retail goods, Southwest Earline - commercial air transportation.

The position of a low-cost producer in the industry promises protection against five forces of competition:

Compared to competitors, a company with low production costs is in the most favorable conditions for conducting price competition, protecting against a price war, using the advantage of a lower selling price as a tool for capturing the market of rivals, making profits above average (due to more high profitability or more sales) in markets where price competition prevails. A manufacturer with low production costs has a decisive voice in setting prices for industry products;
in terms of buyers, the low-cost company in the industry is shielded from strong customers because buyers are unlikely to push the price down to the survival level of the next-ranked sellers;
relative to suppliers, a manufacturer with low production costs is more protected than competitors from the actions of powerful suppliers if the high efficiency of its own production is the main source of advantages in the field of production costs;
relatively to potential newcomers, a manufacturer with low production costs can use price reduction tactics in order to complicate the process of winning customers by new competitors; the price power of a manufacturer with low costs acts as a barrier in the way of potential newcomers;
With respect to substitute products, a low-cost manufacturer is better off than competitors because it uses a low price against attempts at market penetration of substitute products.

Once price competition becomes the main factor in the struggle in the market, firms with relatively low production costs have a significant advantage in attracting buyers whose buying decisions are based mainly on price values.

Competitive strategies aimed at gaining a leading role in the area of \u200b\u200bproduction costs are especially effective in the following cases:

1. Price competition among sellers is the main force of competition.
2. The product produced in the industry is mostly standard and is easy to purchase from a wide range of sellers (conditions that encourage buyers to make purchases at lower prices).
3. There is very little opportunity for product differentiation or, in other words, buyers care little about brand differentiation.
4. The overwhelming majority of buyers use the product in the same way, resulting in a standard set of buyer's requirements for this type of product.
5. It costs almost nothing for buyers to switch from one seller to another; this increases the flexibility of buyers' behavior, encourages them to buy products at the lowest prices.
6. Buyers are generally large and have significant purchasing power.

However, the low-cost strategy is risky and has a number of weaknesses. The discovery in the field of technology can lead to a decrease in the level of costs for competitors and, thereby, devalue a firm's investment in lowering production costs, nullify the importance of efforts to improve production efficiency. Competing firms can relatively easily and inexpensively duplicate the cost-saving path of a manufacturer, thereby making any advantage in this area short-lived. A company that focuses its efforts on reducing production costs becomes fixated on the task of reducing costs in such a way that it often does not respond properly to some outlined significant changes - for example, growing purchasing demand for additional services and quality parameters, subtle shifts in the nature of product use, a decrease in sensitivity of buyers to the level of prices - and thus, losing ground as consumer demand switches to other differentiating features.

So, directing the overwhelming amount of capital investment to lower production costs can lock a company on existing technology and strategy, weakening its immunity to new high technologies and growing consumer interest in something other than low prices.

Differentiation strategies are appropriate when the needs and tastes of customers are too different from customer to customer and therefore cannot be met by producing standardized products. A manufacturer who successfully applies the principle of differentiation carefully examines the behavior and needs of buyers in order to find out the opinion of customers regarding the value and significance of certain features. After that, the company differentiates its products according to one or, perhaps, several characteristics, thereby stimulating the preference of buyers for the products proposed by the company. Competitive advantage is a consequence of the unique (compared to competitors) ability of the firm to meet the needs of buyers who prefer one or another feature of the product.

Successfully carried out differentiation allows the company to:

Establish a premium markup for your products;
sell a larger volume of products (as more buyers are attracted);
to make the brand of the company more popular among buyers (since a certain number of buyers are strongly attached to the differentiating features).

Differentiation promises additional profit if the premium markup can absorb the additional costs associated with differentiation. Differentiation does not bring the desired results if the characteristics underlying product differentiation are not valued by buyers so high as to recoup the additional costs of the firm for differentiation.

There may be different ways of differentiating a firm's products from those of competing firms: different tastes (Dr. Pepper and Listerine), special features (Jen Eyars - on-board cookers with built-in grill), super service (mail delivery overnight FedEx), supply of spare parts (Caterpillar guarantees the delivery of spare parts in 48 hours to anywhere in the world or, in case of failure, free of charge), everything for the consumer (McDonald's), super design and performance (Mercedes in the automotive industry), prestige and uniqueness (Rolex in the production of wrist watches) , reliability of products (Johnson and Johnson in the production of children's toys), quality of production (Karastan in the production of clothing and Honda in the automotive industry), the level of technological performance (ZM corporation in the production of binders and facing products), a full range of services (Merrill Lynch), a full range of products (Campbell in soap making), super image and reputation (Brooks Brothers and Ralph Lauren in production of men's clothing, Kitchen Aid - dishwashers, Cross - a writing instrument.

Any actions of the firm to attract the attention of buyers to the manufactured products are a potential basis for differentiation. Once the drivers of price gouging are identified, traits that can add value to the product are developed (at an affordable cost). The firm can also develop features that increase the productivity and efficiency of its products. In addition, traits can be designed to create a sense of customer satisfaction in the course of consuming the intended product. Opportunities for differentiation can arise anywhere in the sequential production chain. For example, McDonald's has a high rating for French roast, which is due in part to the company's strict commitment to buying a particular variety of potatoes. The quality of Japanese cars is due mainly to the Japanese ability to operate under a well-established quality control system. IBM increases the value of its products in the eyes of customers by providing its customers with a wide range of services and technical support. Clients L.L. Bean feel safe when ordering goods by mail, as the company assumes unconditional responsibility for delivering goods to addressees: "We guarantee that all our products will give you 100% satisfaction. You can return any item you do not like at any time. We will replace it. we will refund the price paid and credit your credit card if you wish. " Commercial airlines use empty seats during inter-peak flights (i.e. additional capacity) to reward their regular customers (free flights).

Differentiation acts as a shock absorber for competing firms' strategies because buyers become attached to a brand or model and agree to pay a little more (and sometimes much more!) For the product they love.

In addition, successfully carried out differentiation:

1.Relates barriers to entry in the form of customer attachment to the unique nature of the products being manufactured, which are very difficult for beginners to overcome,
2.weakens the purchasing power of large customers because the products of alternative sellers are less attractive to them,
3. Puts the firm in a better position to fend off attacks from substitute producers because buyers are loyal to the firm's brand.

To the extent that differentiation allows for higher prices and higher margins, the manufacturer is in a stronger economic position to withstand the pressure from suppliers in the form of higher prices for raw materials and supplies. Thus, just as with the cost-cutting strategy, successful differentiation creates a strong line of defense against the five forces of competition.

The most successful types of differentiation strategies are those that are time consuming and expensive to imitate by competitors. The presence of exceptional perfection plays an important role here.

If the firm possesses skill and competence in any field of activity, and it is very difficult for competitors to repeat this achievement, then this factor can be successfully used to differentiate.

Differentiation based on:

Technological superiority;
high quality products;
providing consumers with a wider range of related services;
providing consumers with more "value" for the same price.

In general, differentiation strategies are best suited when:

1.There are many possible ways to differentiate products or services, and a significant proportion of buyers perceive these differences as having a certain price,
2.The needs of buyers for this product differ, and, the product itself can be used in different ways,
3. A small number of competing firms rely on a similar approach to differentiation.

Buyers very rarely pay a price that is at odds with their subjective assessment of the product or service. In this case, the justification of the additional costs is absolutely irrelevant. Therefore, the premium margin, which is the result of the implementation of the differentiation strategy, is nothing more than a reflection of the actual value and subjective assessment of the offered products by the buyer. The difference between the actual value and the subjective assessment is observed when the buyer does not have the opportunity to pre-evaluate the proposed product. The lack of adequate information from buyers often forces them to make a decision, focusing on incoming signals in the form of: oral recommendation of the seller, attractiveness of packaging, intensity of advertising, advertising content and advertising image created, form of presentation of information in brochures and advertising brochures, associations associated with the seller's name , the circle of the seller's customers, the market share of the firm offering the product, the length of time the firm has been in the market, the price quoted (where the price indicates "quality"), the professionalism, appearance and personality of the seller.

These price signals can be as significant as the actual value if:

1.the nature of differentiation is subjective and difficult to quantify,
2. buyers are purchasing a product for the first time,
3.It is unlikely that this product will be purchased again,
4. Buyers are not burdened by the experience.

A vendor whose differentiation strategy yields very modest intrinsic value but has strong price signals will often successfully sell their products at higher prices than a competing firm that provides high intrinsic value but has weak price signals.

Attempts to differentiate are usually associated with additional costs. In order for differentiation to be profitable, it is necessary either to maintain the level of additional costs below the premium margin (as a result, the rate of profitability of production in general increases), or to compensate for the decrease in the rate of return by increasing the amount of profit received (a larger amount of profit can be achieved even with a decrease in the rate of return if sales volume increased significantly as a result of the differentiation).

When differentiating, the firm must strictly control the level of production costs, not allowing it to exceed the level of competitors' costs. Otherwise, the premium markup, set taking into account the amount of additional costs, will be too high for buyers. From the point of view of the level of costs, the differentiation strategy is justified if, as a result of its implementation, the company gains a competitive advantage in the area of \u200b\u200bproduction costs or sets a premium margin that more than covers additional costs.

The use of additional signs of differentiation can also be effective if it is not associated with high costs, but contributes to better customer satisfaction - for example, first-class restaurants, as a rule, provide such additional services as a slice of lemon in a glass of water, parking cars, etc. ...

There is, of course, no guarantee that differentiation will lead to a tangible market advantage. If buyers do not appreciate the uniqueness of the offered product (that is, the standard product satisfies their needs quite well), then the strategy to reduce production costs can easily overturn the differentiation strategy.

Moreover, a differentiation strategy does not produce the expected results if competitors can easily learn from the differentiation experience. The ability to simulate quickly indicates a lack of genuine differentiation, as competing firms are making similar changes, negating all attempts by the manufacturer to achieve uniqueness. Thus, for differentiation to be successful, the firm must find a reliable uniqueness factor that cannot be easily and quickly imitated.

In addition to these points, the following weaknesses of the differentiation strategy can be distinguished:

Trying to differentiate based on attributes that do not reduce costs or increase customer satisfaction as much as they expected;
too high level of differentiation, as a result, the price is too high relative to the products offered by competitors, or the level of quality of products and services exceeds the level of customer needs;
an attempt to set too high a premium margin (the higher the margin, the more buyers may be tempted by a cheaper competitor's product);
ignoring the value of price signals and emphasizing the value of only the actual value;
misunderstanding of the point of view of buyers regarding the valuable qualities of the product.

Concentration begins with the selection of a market niche characterized by specific requirements and preferences of buyers. A niche can be singled out due to its geographical location, special requirements for the use of products, or due to the specific properties of products that satisfy niche consumers. The basis for successful competition in a niche concentration strategy is either lower than competitors 'costs or the ability to offer niche consumers something different from competitors' products. The success of a cost-based concentration strategy depends on having a target market segment that can be met at a lower cost than the rest of the market. The success of a focusing strategy based on differentiation depends on having a target market segment that requires products to have some specific qualities.

The concentration strategy is very widely used to significantly reduce costs. Discounted brokerages have reduced their costs by focusing on clients who are primarily interested in buying and selling and who do not want to use the services such as investment research, investment consulting and other financial services offered by full-service firms. It is possible to profitably reduce costs by applying a concentration strategy if the company finds ways to significantly reduce costs, limiting its client base to a strictly defined segment of buyers.

Market segments favorable to using a concentration strategy must have one or more of the following characteristics:

The segment is big enough to make a profit.
The segment has a high potential for development.
The segment will not be successful for most competitors.
A segment-focused firm has the skills and resources to serve the segment effectively.
A segment-focused firm can protect itself from competitors by establishing good customer relationships and better customer service capabilities in the segment.

The use of special concentration techniques in serving the target market niche is the basis of defense against five competing forces. Competitors do not have an equal opportunity to serve the target clientele of a focusing firm. The special techniques of a firm using a concentration strategy give it a competitive advantage, preventing it from entering its market niche. Her special techniques are also a hindrance to those who wish to replace her. To some extent, the failure of influential clients to do business depends on their unwillingness to do business with firms that are less able to meet their needs.

Concentration works well if:

1. Serving the target market niche requires significant costs and efforts from a large mass of competitors;
2. when no competitor tries to specialize in serving the same target market niche;
3. when the firm's resources do not allow it to successfully serve a large segment of the market;
4.when industrial branches (segments) vary widely in size, level of development, profitability, and intensity of the five competing forces that make some segments more attractive than others.

Using a concentration strategy is sometimes risky. First, the possibility is assumed that large masses of competitors will find effective ways and will be able to oppose themselves to a concentrated firm in serving a narrow target market. In the second case, there is a possibility that the needs and preferences of niche buyers will gradually shift towards such product qualities that the market as a whole requires; This blurring of distinctions between buyers of different segments opens the door for a variety of competitors to invade the target market of the firm focused on it. In the third case, the attractiveness of the segment becomes so obvious that the segment is flooded with competitors, and profits are shared among many firms. Before you know it, price insensitive money consumers will have a huge number of firms to choose from, thus ending your ability to charge a higher price.

In addition to the price pressure of taxes, there is another problem related to the level of costs. A shift in interest from a broad market to a limited segment usually means a sharp decline in production. This can lead to extremely high unit costs if you have not reduced the overhead costs, which must match the lower production volume driven by the narrower customer base. This way you can end your activity. Under pressure from both prices and costs.

Formation of a competitive strategy

When developing a competitive strategy, remember about the planning hierarchy - the strategy should disclose the stated goals and objectives of the enterprise. To do this, building a strategy must begin with an analysis of the current market situation and one's own position on it. After collecting and analyzing information about the market and competitors, responses are developed - strategies. But it is worth noting that the finished strategy itself is not the result and the ultimate goal of developing a competitive strategy; it is very important to analyze its implementation and the experience gained. Subsequently, this analysis will become the starting point for future strategy development.

From a variety of principles, such as proportionality of production, rationality, scientific character, etc. The author shows that the function of competitive strategic planning at an enterprise, based on the above scheme, is carried out using specific principles, that is, the rules for forming a competitive strategy in the market.

The continuity of the competitive strategy lies in the fact that the enterprise, even before developing the strategy, must analyze the previous experience, find out which actions had a positive effect in the competition and check their relevance to the current moment. In addition, learning from past experience will enable an enterprise to avoid old mistakes when developing a new strategy.

The sequence is caused by the dependence of the subsequent stage on the results obtained in the previous one. On the basis of this, an algorithm for the steps to be taken to develop a strategy is needed, which will avoid the inconsistency between the competitive strategy and the market situation, mistakes that have already occurred in the past, and evaluate the results obtained during the implementation of the strategy.

The cyclical nature of competitive strategic planning is manifested in the fact that the results of the implementation of the competitive strategy must be analyzed and taken into account in the subsequent development of strategies, since the competitive strategy is constantly adapting to the competitive environment.

Competitive strategy; and its constituent parts are a good tool in the hands of managers, since it allows them to solve a number of tasks and problems that the company faces. First, the available analytical material, obtained and structured in the course of strategy formation, allows both management and performers to clearly see the situation on the market, the company's position on it, the reality of goals and ways to achieve them. Secondly, the competitive strategy, approved by the company's management (general director), acquires the force of an organizational and administrative document. And finally, thirdly, by analyzing its activities in past periods, a company can constantly improve and expand its scope of activities, adequately respond to market changes, strengthen its market position and conquer new markets.

The main stages of the competitive strategy being implemented are:

Determination of the strategic area of \u200b\u200bthe company's management - the mission and strategy of the company;
Preliminary Objectives - Based on previous experience and corporate strategy.

They set the direction for action in the competitive struggle:

Collection of information about the external and internal environment;
Information structuring and subsequent analysis;
Development of a competitive strategy and selection of strategic alternatives;
Comparison of the developed strategy and initial goals and analysis of the selected strategic alternative;
Competitive Strategy Implementation - Competitive Action Plan;
Monitoring the achievement of the set goals and implementation of the plan;
Analysis of the experience gained and the implemented strategy - the accumulation of experience.

A series of systematic actions can help determine strategies when the stakes are high and the costs of resources for the firm are significant. This reduces the risk of missing out on important issues and reveals the assumptions on which the strategy is based and resources are allocated. The proposed description of the principles of competitive strategic planning is a new approach to the development of competitive strategies and, from the author's point of view, opens up new horizons for analysts. The new approach is that the final competitive strategy, initially coordinated with the company's mission, as well as with general corporate objectives, will be aimed at increasing competitiveness, and will not run counter to the company's market ideology.

Competitive behavior strategies

Depending on the circumstances, the firm may employ any type of competitive behavior:

1. Creative. The system of competitors' actions consists of measures aimed at creating new market relations that ensure superiority over rivals.
2. Adaptive. It consists of taking into account innovative changes and attempts to anticipate the actions of rivals associated with the modernization of production. The entrepreneur copies the achievements of his rivals as soon as possible.
3. Providing (guaranteeing). Such competitive behavior based on the desire of entrepreneurs to maintain and stabilize for the future the achieved positions in the market by improving the quality of products that attract consumers, modifying the range, supply additional servicesthat are related to warranty service.

All actions of the firm are subject to competitive strategy. The system of actions of the company is subordinated to this concept aimed at achieving the ultimate goals. Every firm applies two strategic attitudes - the installation to monopolize the market (strategy of monopolization) and to enter its activities into a single process of market functioning (integration strategy). According to the first setting, actions are aimed at reducing the number of competitors, the second involves stabilizing their own position by reducing the degree of risk through long-term and short-term cooperation with other firms in the form of a corporation. The choice of strategy is made depending on the role and content functions of the firm in the process of competitive interaction.

When it comes to the role function of a firm, the following types of competitors are distinguished:

1. Leaders. We are forced to repel the attacks of other leaders and use similar methods of frontal, complex, that is, in several directions at once (advertising, prices, etc.), and flanking (in one direction).
2. Applicants for leadership. Shows significant attack potential. The attack on the leaders' positions can be frontal or flanking.
3. "Followers". They do not compete with groups 1 and 2, they follow the path beaten by the leaders.
4. Beginners. The goal is to find a market niche and consolidate in it.

In accordance with the content function, the following types of competitors are distinguished:

1. Large, highly sustainable mass production companies.
2. Specialized companies that are entrenched in certain niches.
3. Small and medium-sized firms that carry out mass production, thanks to which they are ahead of competitors.
4. Small universal firms using the effect of flexibility and high agility in competition with other companies.

The goal of a competitive strategy

The goal of a competitive strategy is to achieve superiority over competitors in providing consumers with in-demand goods and services and thereby gain a competitive advantage and market leadership. In addition, competitive strategy includes offensive and defensive actions, allocation and reallocation of resources to maintain long-term competitive opportunities and an advantageous competitive position, as well as tactical actions taken when market conditions change. Businesses around the world are trying to develop extraordinary competitive strategies. Since the competitive actions of a company are designed taking into account the specifics of its position in the market and the general situation in the industry, there are countless options for competitive strategies - there are as many competitive strategies as there are competitors. However, in general, the differences in strategies are determined by two factors: the goals that the organization pursues in the market, and the basis of competitive advantage - low costs or differentiation.

Competition strategy is a set of techniques and initiatives aimed at attracting and satisfying customers, confronting competitors and strengthening market position. The concept of competitive strategy is narrower than the concept of business strategy, because the latter, in addition to the methodology of competition, includes actions and plans of management to solve the entire range of strategic tasks.

The main goal of a competitive strategy is to form a certain level of competitiveness of the enterprise. Depending on the current market position of a particular enterprise and the production and economic tasks facing it, the strategic goal can be reduced either to an increase in competitiveness, or to maintaining it at the current level. The direction of the development of specific management techniques and methods further depends on this. In any case, the goal of the competitive strategy must fit into the overall management system used in the enterprise.

The organizational model of the formation of a competitive strategy of an agricultural enterprise involves an assessment of its competitiveness in the context of base groups factors that directly influence it: external and internal.

The next stage of the algorithm for the formation of a competitive strategy involves the formation of strategic alternatives, which are scenarios for ensuring the competitiveness of an enterprise with the corresponding predicted values \u200b\u200bof competitiveness indicators.

The development of options for the development of the enterprise and the forecasting of key indicators allows for a possible choice of the motion vector. One of the options for the development of an enterprise is the prolongation of the current position of an economic entity with a corresponding transfer of the existing dynamics of key indicators to the forecast period. Thus, the first scenario is passive and does not imply significant changes in the economic activity of the entity. An alternative development option provides for the growth of projected indicators as a result of the implementation of activities aimed at achieving the strategic goal. In turn, such a development scenario is based on strategic goal-setting, is focused on improving the relevant indicators and contains specific recommendations based on the company's existing "weaknesses" or based on existing competitive advantages.

When developing a strategy, it is necessary to calculate the predicted values \u200b\u200bof key indicators. In this case, the values \u200b\u200bobtained under the strategic scenario are taken as target indicators of competitiveness.

The algorithm for the formation of a competitive strategy provides for the creation of a monitoring system for its implementation at the last stage. The purpose of monitoring the implementation of the strategy is to track progress towards achieving the set goal through changes in the level of competitiveness of the enterprise.

Monitoring the implementation of measures consists in the analysis of the actual values \u200b\u200bof the indicators of the strategy implementation and their comparison with the target values.

Thus, the algorithm for the formation of a competitive strategy of an agricultural enterprise provides for the consistent implementation of actions to develop the enterprise in the direction of increasing its competitiveness.

Competitive differentiation strategy

Differentiation strategies are strategies arising from external competitive advantage, which relies on the marketing know-how of the firm, its superiority in identifying and meeting the expectations of customers who are dissatisfied with existing products. They are aimed at putting on the market goods or services that are more attractive to consumers in terms of their qualities than competing products.

According to the canonical theory of M. Porter, competitive advantage in the market arises on the basis of providing consumers with products that give more value for the same cost (differentiation), or providing equal value, but at a lower cost (low Costs).

In differentiation, the main emphasis is on creating a product (a set of tangible and intangible attributes), which is perceived by the consumer as "something unique." These can be design or performance characteristics of a product, excellent service, a prestigious brand, etc.

Each manufacturer decides for himself how to position his product as cheaper, or as more useful, original, high-quality. Combining these two strategies into one whole is almost impossible.

Among marketers, there is even such an expression "The more significant the difference between a product and its competitors, the more justified is every extra zero in its price tag."

In differentiation, the main focus is on the uniqueness of the product. But it is necessary to differentiate a product not only with the help of its distinctive quality. For these purposes, it is necessary to use other strategies so that the buyer is convinced of the features of the product so that he is ready to pay for it a price higher than the cost of similar products from competitors.

“The essence of a differentiation strategy is to find ways to be the only one who offers customers the additional product features they want and maintain that advantage at all times.”

As outlined above, product differentiation is not just about distinguishing quality. There are several types of differentiation that determine the uniqueness and feature of the product.

Product differentiation - when the characteristics and / or design of the proposed product is better than that of the competition. This type of differentiation is difficult to apply when it comes to any standardized products (essential food, oil products, metal). But when promoting differentiated products (cosmetics, clothing), following this strategy is common.

Service differentiation is the offer of additional services that accompany the proposed product, which the buyer needs in one way or another before or after the purchase. It can be training and consulting, speed and reliability of supplies, installation, service. For successful service differentiation, related services must be either free or cheaper, or superior in level to those of competitors.

Differentiation of personnel - when the emphasis is on personnel who perform their functions more efficiently than the personnel of competitors. Typically, personnel differentiation is most commonly used in the service delivery industry.

Naturally, personnel who inspire confidence, give the impression of being reliable, responsible and communicative people and are competent in their area of \u200b\u200bresponsibility is not easy to obtain. You need enough time, money and effort to invest in his training.

Image differentiation consists in creating a certain image of an organization or its products, which distinguishes them for the better from competitors. This strategy is also known as branding and is achieved exclusively through effective advertising.

Depending on the characteristics of specific products and the capabilities of the company, you can implement simultaneously from one to several areas of differentiation.

Competent differentiation over time gives the following results:

Profit growth even if market share remains unchanged.
An increase in market share, which also provides an increase in income, even if prices are comparable to those of competitors.
A combination of growing market share and revenue.
The revenues generated cover the investment costs and costs associated with creating a differentiation strategy.

If none of the results were achieved, it should be recognized that the differentiation strategy was unsuccessful, and the investment turned out to be unprofitable.

A company (or a strategic business unit within a diversified company) has a competitive advantage in a certain market for goods / services if the amount of economic profit that its operations sustainably provide exceeds on average the size of the economic profit of competing firms operating in the same market (it is considered that several companies are competing in the same market if decisions in the field of production, pricing or marketing of one company significantly affect the level of economic profit that other companies can receive).

Basic competitive strategies

There are three types of single business strategy:

Price Leadership;
- differentiation;
- focusing.

These strategies are referred to as basic strategies because all businesses or industries follow them, whether they manufacture, service, or are unprofitable enterprises.

Character traits basic strategies are shown in the table:

	Price Leadership	Differentiation	Focusing
Grocery differentiation	Low (mostly by price)	High (mainly by properties)	Low to high (prices or properties)
Segmentation market	Low (mass market)	High (many market segments)	Low (one or few segments)
Distinctive competence	Manufacturing and materials management	R&D, sales and marketing	All kinds of distinctive competence

The main advantages and dangers of basic strategies.

The advantages of a low-price leadership strategy are the ability for a leader to offer a lower price than competitors at the same profit level, and in a price war, the ability to compete with better starting conditions. The price leader chooses a low level of product differentiation and ignores market segmentation. The price leader is protected from future competitors by its price advantage, works for the average consumer, providing a lower price. The advantage of the price leader is the presence of barriers to entry, since other companies are unable to enter the industry using the leader's prices. Thus, the price leader is relatively safe while maintaining the price advantage.

The goal of a differentiation strategy is to achieve competitive advantage by creating products or services that are perceived as unique by consumers. In this case, companies can use an increased (premium) price. The advantage of a differentiation strategy is the company's safety from competitors as long as consumers maintain a steady loyalty to its products. This gives it a competitive edge. The company naturally has no problems with strong customers either: differentiation and widespread customer loyalty create barriers to entry for other companies, which need to carry out competitive developments for this. Finally, substitute products can only pose a threat if competitors are able to produce products that satisfy customers equally and can break enduring loyalty to the differentiated company. The main problem of such a company remains to maintain uniqueness in the eyes of consumers, especially in conditions of imitation and copying. The threat can also arise from changing consumer needs and tastes.

Changes in manufacturing technology make the difference between price leadership and differentiation strategies less visible. Firms can implement differentiation policies at low costs. Another way to reduce costs in differentiation is the widespread use of standard assemblies and parts, limiting the number of models, and using a just-in-time supply chain. With this in mind, some firms are trying to combine the advantages of price leadership and differentiation: they charge a premium price for their products relative to the price of a pure price leader, but which will be lower than that of a pure differentiator, which can provide them with higher profits than companies using pure basic strategies.

A focusing strategy selects a limited group of segments. A marketing niche can be distinguished geographically, by type of consumer, by a segment from a range of products. Having chosen a segment, the company uses either differentiation or a low-price approach in it. If it uses a low-price approach, then it competes with the price leader in the market segment where the latter does not have an advantage. If a company uses differentiation, it benefits from differentiating in one or a few segments. Most often, the distinctive advantage in the form of quality based on competence in a narrow field is used.

The competitive advantage of a company adopting a focusing strategy stems from its distinctive advantage, which gives it a good competitive strength against buyers, since they cannot get the same product elsewhere. In relation to strong suppliers, however, the focusing company is in a worse position, since it purchases in relatively small volumes. But as long as it can increase prices for loyal customers, this disadvantage is not that significant. Flexible production systems create new advantages for focusing companies: small batches can be produced at a lower cost. However, in general, they have less opportunity for economies of scale.

Their second problem is that the niche for which the company operates may suddenly disappear due to changes in technology or in consumer tastes. Since there is a threat that differentiator companies will create similar products, and the price leader will attract buyers at a low price, then a company with a focus strategy must be in a state of constant defense of its niche.
Up

Eldar Aminov Head of the strategic marketing group of OJSC "Production Association" Krasnoyarsk Combine Plant "

Competitive strategy is a tool in the hands of enterprise managers that allows them to achieve their goals. In order for the competitive struggle to be conducted deliberately, it is necessary to develop a competitive strategy, draw up a plan for its implementation and analyze the results of the implementation of the plan. The developed plan for the implementation of a competitive strategy helps all employees of the organization to clearly understand what function they should perform when working with each market segment and how to behave in response to certain actions of competitors. In other words, it creates conditions for coordinated work of managers of different departments to achieve common corporate goals. And on the market, the company's actions become interrelated and purposeful.

The general idea of \u200b\u200bdeveloping a competitive strategy is an action program that allows you to get a positive economic effect due to the fact that the company is in a stronger competitive position.

In general terms, the development and implementation of a competitive strategy can be represented in the form of the diagram shown in Figure 1.

Picture 1. Stages of development and implementation of a competitive strategy

The above diagram shows that the function of competitive strategic planning in an enterprise is carried out using basic principles, that is, the rules for the formation and implementation of a strategy in the market:

• continuity and accumulation;
• the sequence of steps (stages) performed;
• cyclicality.

The continuity of the competitive strategy lies in the fact that the enterprise, even before developing the strategy, must analyze the previous experience, find out what actions were useful in the competition and check their relevance to the current moment. In addition, learning from past experience will enable an enterprise to avoid old mistakes when developing a new strategy.

The sequence is caused by the dependence of the subsequent stage on the results obtained in the previous one. This will allow avoiding the inconsistency between the competitive strategy and the market situation, mistakes that have already occurred in the past, and assess the results obtained during the implementation of the strategy.

The cyclical nature of competitive strategic planning is manifested in the fact that the results of the implementation of the competitive strategy must be analyzed and taken into account in the subsequent development of strategies, since the competitive strategy is constantly adapting to the competitive environment.

Competitive strategy is an important tool in the hands of managers, as it addresses a range of challenges and problems that a company faces.

First, the available analytical material, obtained and structured in the course of strategy formation, allows both management and performers to clearly see the situation on the market, the company's position on it, the reality of goals and ways to achieve them.

Secondly, the competitive strategy approved by the company's management acquires the force of an organizational and administrative document, that is, it allows concentrating forces in the required direction.

And finally, thirdly, by analyzing its activities in past periods, a company can constantly improve and expand its scope of activity, adequately respond to market changes, strengthen its market position and conquer new markets.

Nowadays, practitioners often have to deal with a situation where there is a gap between the theory of competitive strategies and the practice of its application in the enterprise. This gap can be minimized by the algorithm proposed below for developing and implementing a competitive enterprise strategy (Fig. 2).

Figure 2. Algorithm for the development and implementation of a competitive strategy

According to the proposed algorithm, the development and subsequent implementation of a competitive strategy is carried out by sequentially performing eight main stages:

1. Mission and corporate development strategy of the enterprise.
2. Formulation of objectives in the competition in the market.
3. Collection and analysis of information about the external and internal environments of the enterprise.
4. Choosing a competitive strategy for the enterprise in the market.
5. Analysis of the chosen strategy.
6. Implementation of a competitive strategy through a developed plan.
7. Analysis of the results of the implementation of the strategy.
8. Correction of the existing strategy or the development of a new, more effective strategy that will be able to achieve the objectives set by the general corporate strategy of the enterprise.

It is important to note that since the competitive strategy is lower in the hierarchy of strategic planning than the general corporate strategy of enterprise development, it makes sense to start developing a competitive strategy after the end of work on the general corporate strategy of enterprise development.

Due to the fact that the development and implementation of a competitive strategy affects various services and functional units, it is logical to divide the algorithm into phases. All eight stages are divided into three phases:

• Preparation phase (stages 1 and 2).
• Development phase (stages 3, 4, 5).
• Implementation phase (stages 6, 7, 8).

The preparation phase is under the authority of the strategic planning and corporate development department, or the functional unit responsible for these areas (stage 1). The developed general corporate strategy of the enterprise is presented to the protection of the management and owners of the enterprise, who, as a whole, for the enterprise finally determine the priority tasks in the competition (stage 2). The preliminary tasks in the competitive struggle in the market are formulated in accordance with the corporate goals and directions of the enterprise development.

At this stage, it is necessary to determine the nature of the competitive struggle (for example, offensive or defensive), who exactly needs to be squeezed in the market, for whom (for example, competitor "A") you can force to divert your resources from the market "a" by switching it to this market and weakening its position in the strategically important market (b)). This approach allows you to compete globally through local clashes with specific competitors. It should be remembered that only the hierarchy of strategic planning at the enterprise (general corporate strategy - competitive strategy in the market) allows effective global competition. This approach has become especially relevant right now - a global market has formed, and interstate borders have become practically transparent for capital, goods, and labor resources. As a result, a change in the situation in one market can have an impact on another market, and, accordingly, on its participants.

In the development phase, the tasks that have been formulated by the management of the enterprise are conveyed to the functional unit responsible for marketing and sales. In the future, the analysts of this unit analyze the market, while the key positions of the analysis are the intensity of competition in the market and the competitive position of the enterprise (stage 3). Based on the analysis, a suitable competitive strategy is selected (stage 4). Further, this strategy is analyzed from the point of view of compliance with the general corporate objectives, which were formulated by the management, as well as from the point of view of the enterprise's capabilities. Marketing competitive strategy, as noted above, is determined based on external factors (analysis of environmental conditions) and internal factors (available resources of the firm). In order to get a clear assessment of the internal capabilities of the enterprise and the market situation, you can use the SWOT analysis.

The use of SWOT analysis is necessary for the systematization of available information and subsequent management decisions. Therefore, SWOT analysis can be called an intermediate link between the formulation of a competitive strategy of the enterprise and the development of a competitive plan (stage 5). Everything happens in the following sequence:

1. Determination of the main competitive strategy of the enterprise in the planning period.
2. Comparison of the internal forces of the company and the market situation in order to understand whether the company will be able to implement the selected competitive strategy, and how it can be done (SWOT analysis).
3. Formulation of goals and local tasks, taking into account the real capabilities of the enterprise (development of a competitive plan). Below is a diagram showing the place of SWOT analysis in the development of a competitive strategy (Fig. 3).

Figure 3. The place of SWOT analysis in the development of a competitive strategy

As another criterion for assessing and adjusting the chosen competitive strategy, managers need to consider the corporate goals of the enterprise, which are based on the mission and overall development strategy. This agreement is necessary so that the chosen competitive strategy in a particular market does not have a negative impact on the development of the enterprise as a whole. For example, an attack on competitors (with the aim of displacing them from the market) or the takeover of some of them can significantly increase the company's market share, but at the same time exceed the antitrust regulations or the costs incurred will not be able to pay off.

If the competitive strategy meets all the requirements, the process of developing a competitive strategy moves into the implementation phase. In this phase, the developed strategy is implemented - the marketing and sales specialists of the enterprise act on the market in accordance with the approved strategy (stage 6). The main difficulty at this stage is that it is necessary to competently implement the developed strategy and then evaluate its effectiveness. The implementation of this task can be helped by the plan for the implementation of a competitive strategy, the structure of which is proposed below.

1. Summary.

This section of the Competition Plan is finalized and in its final form should begin with the formulation of goals, a description of the strategy and a short plan of action to achieve the goal and implement the strategy. A summary that helps management quickly grasp the main points of the plan.

2. Description and analysis of the current market situation.

Brief political and economic situation of the region / country market.

Analysis of the market and consumers of goods in a given region / country.

3. Description and analysis of competition in the market.

Analysis of competitors' activities.

Analysis of the competitive position of the enterprise in the market.

Assessment of the intensity of competition in the market.

4. Results of the previous period.

Actual and planned results of the previous period.

Analysis of the results of the past period. Description of the reasons for the failure or overfulfillment of the plan.

5. Setting goals and describing the chosen strategy.

Competitive strategy is determined by the results of research of the competitive environment and the position of the enterprise in the market.

6. Evaluation of the chosen competitive strategy.

The assessment of the chosen strategy is based on an analysis of the external environment and internal capabilities of the enterprise (SWOT analysis). In addition, the selected competitive strategy must be reviewed for alignment with corporate objectives. Here it is also necessary to characterize the selected competitive strategy, describe the necessary conditions for the successful implementation of the competitive plan and the possible reasons that can interfere with its implementation.

7. Implementation plan for the selected competitive strategy.

In this section, it is necessary to state:

A. Quantitative targets that define the absolute numbers of sales and relative growth rates. At the same time, these indicators must be expressed both in the number of units of goods (attracted new customers) and in monetary terms. Another important baseline indicator for the planning period is the company's market share, which is planned to be occupied by the end of the period.

B. A set of measures and actions to achieve the set goals. Competitive strategy is considered in accordance with the marketing mix (four "I" - product, price, distribution, promotion). This circumstance allows it to be successfully implemented by accurately distributing tasks and functions between various departments of the company, as well as to subsequently analyze the effectiveness of the competitive strategy after the planned period. In the events, it is necessary to take into account such points as the need for testing, standardization, presentations, sending specialists for specific purposes (conducting market research, conducting negotiations, participating in exhibitions, providing and developing service, etc.). Each event is assigned a deadline, as well as specific performers.

8. Budget for the planning period.

The required amount of funds allocated for the implementation of the competitive strategy is analyzed.

It is well known that any activity must begin with planning, long before the moment the first step in the chosen direction is taken. The main task of the competition plan is not only to indicate the direction, but also to describe the route, the procedure for achieving the set goals - conducting research of competitors, preparing response actions and their implementation. Thus, the competitive plan discussed above is an applied tool for the development and implementation of competitive strategies in an enterprise.

At the end of the reporting period, the results obtained in the course of implementing the competitive strategy are analyzed, and the effect obtained is determined (stage 7). At this stage, the competitive plan plays the main role, which, in fact, is the source of the accumulation of experience by the enterprise. By analyzing its activities in past periods, the company can constantly improve and expand its scope of activity, adequately respond to market changes, strengthen its market position and conquer new markets. Key questions to be answered:

• the correctness of the chosen strategy?
• the reaction of competitors?
• the correctness of the planned activities and correlate the results obtained and planned?
• the effectiveness of the tasks assigned?
• to highlight successful and unsuccessful approaches, methods, ideas?

If the competitive strategy proved to be effective and has positive results for the company, then issues of its adjustment and relevance in the next reporting period are considered. After that, an updated competitive plan with new goals is developed (stage 8). If the competitive strategy did not have a positive effect or had negative consequences, the reasons are determined and a new competitive strategy is developed.

Often, a competitive strategy is something isolated in strategic planning at an enterprise, meanwhile it is directly integrated into it and is its integral part. The presented step-by-step algorithm for developing a competitive strategy and a plan for implementing the developed strategy make it possible to establish a closed cycle of competitive strategic planning.

McDonald M. Strategic marketing planning. SPb .: Peter, 2000.S. 76.

Day J. Strategic Marketing. M .: Eksmo, 2003.S. 159.

Hill Charles W.L. International Business: Competing in the Global Marketplace. - McGraw-Hill Higher Education, 2004.

Bagiev G.L., Tarasevich V.M., Ann H. Marketing. - M .: Economics, 1999.

After completing Chapter 7, the student should:

know

• the concept of competitive strategy;
• classification of competitive strategies of the enterprise;
• methodological approaches to the formation of competitive strategies of the enterprise;

be able to

• determine the role and importance of the competitive strategy of the enterprise in its activities;
• analyze the possibility of implementing a competitive strategy in the functional strategies of the enterprise;

own

• skills in the development of functional strategies of the enterprise;
• mechanism for the implementation of the competitive strategy of the enterprise.

Competitive strategy: concept and classification

Strategy is necessary because the future is unpredictable.

R. Waterman

Competitive strategy Is a generalized model of actions and a set of rules that should be followed by an enterprise when making decisions to achieve and maintain long-term competitiveness.

The strategy sets a certain framework for identifying and assessing changes in the external and internal conditions for the development of the system and the needs for its improvement caused by these changes.

Strategy as a means to achieve long-term goals focuses on forecasting the behavior of the external environment and, in this regard, the analysis of the possibilities of the functioning and development of the enterprise. The strategy is adaptive to changes in the external environment and mobilizes the resources of the enterprise, directing them to achieve the set goals.

Currently, there is a wide variety of strategies that can be presented in the form of the classification shown in Fig. 7.1.

In accordance with the above classification features, the following are distinguished.

By possibilities of using highlight strategies - typical and original.

Depending on the management level distinguish between strategies: corporate, business, functional and operational.

Corporate strategy is the overall strategy of the corporation as a whole.

Business the strategy aims to establish and strengthen the long-term competitiveness of the enterprise in the market.

Functional the strategy is carried out across the enterprise in the selected functional areas: marketing, personnel, finance, etc.

Operating the strategy is implemented on the scale of individual divisions of the enterprise: advertising, cost centers, etc.

Figure: 7.1.

Depending on the type of functioning, competitive strategies of commutators, patents, violets, explents, litalent are distinguished, which reflect a specific type of biological behavior of an enterprise and have a corresponding analogy with the behavior of biological systems.

Commutants, or "Gray Mice" - small, flexible enterprises, easily adapting to changes in market demand. Often they offer imitation goods (services), counterfeit goods (services), are not firmly tied to a specific field of activity, and easily move from one market to another. Low market stability. Flexibility and adaptability are at the core of this competitive strategy.

Switches can be medium or small businesses that have experienced the peak of their efficiency, more focused on stable limited demand and services than on innovation and individualized approach to customers.

Patents, or "Sly Foxes" - highly specialized enterprises with quantitative growth (personnel, communications, departments) that have mastered one of the niches (areas of needs) of the market. Not very large enterprises that have been producing goods and services of a certain type for many years. Competitive strategy is based on narrow specialization, low costs and high quality of goods (services).

Violents, or "Elephants", "Lions", - giant enterprises that have achieved the most stable position in the market and exercise control over a significant market share. Competitive strategy - low costs due to a large scale of activities and satisfaction of massive customer demand.

Explorers, or "Moths" - start-ups, emerging enterprises, whose competitive advantage is innovation, new technologies and goods (services). They are weakly connected with the market, do not have enough funds for its development, wide marketing activities. They effectively act as venture divisions of large enterprises or their subsidiaries. The basis of activity is new ideas, external financial support.

Litalents, or "Dying" - these are enterprises with an unnecessarily complicated, ineffective structure, a decline in financial performance. They need a quick re-profiling for new business, new technologies, new markets, orientation towards destructuring and refinancing.

Allocate strategies due to the company's position in the competition: offensive, defensive.

Offensive the strategy is typical for enterprises that base their activities on the principles of entrepreneurship. A fundamentally new product (service) or technology that brings competitive advantages is being designed and implemented.

Defensive the strategy is aimed at keeping the competitive position of the enterprise in the already mastered sales markets. The main function of the strategy is to activate the cost-benefit relationship with its own benefits and benefits for buyers. With such a strategy, the competition is conducted not by the originality of the product (service) or technology, but by their price, volume of supply and quality.

On analysis of the forces of competition Michael Porter identified three basic competitive strategies with universal applicability, with the help of which an organization can secure a competitive advantage: cost leadership, differentiation, focus.

• 1. Cost leadership creates protection against the action of all five forces of competition:
  • the company is able to make a profit at the minimum acceptable price for competitors;
  • low costs create an entry barrier for new competitors and substitute products;
  • low costs protect the company from the actions of strong suppliers, providing more flexibility in the event of price increases;
  • strong consumers are unable to push prices below the level acceptable to the strongest competitor.

Low-cost leadership is effective under the following conditions:

• price is the dominant competitive force;
• industry product - standardized, easy to manufacture;
• lack of opportunities for differentiation;
• "big" buyers have significant trading power.

Low-price leadership has the following risks:

• technological changes that devalue previous experience and investments;
• the ability to copy the competitive advantages of cost leadership by competing enterprises;
• inability to make changes to the product on time due to exaggerated attention to costs.
• 2. Product differentiation is aimed at buyers who are ready to pay more, but for a higher quality or for a wider choice of consumer qualities of a product (service).

Differentiation can be horizontal (differences in goods or services by individual characteristics, the price is approximately the same) and vertical (the offered characteristics of goods or services, their prices and the average solvent income level of consumers are different).

Differentiation also protects the enterprise from five competitive forces, but in a different way:

• in relation to competitors, differentiation reduces the possibility of product substitution, enhances consumer loyalty to the brand, reduces price sensitivity and thereby increases profitability;
• the distinctive properties of the product and the acquired loyalty of customers protect the enterprise from substitute products;
• increased profitability increases resistance to possible price increases by a strong supplier.

Differentiation is attractive under the following conditions:

• there are many ways to differentiate a product;
• the organization has production or marketing know-how;
• the needs of potential consumers differ;
• few competitors in the industry are following a similar path of differentiation;
• demand is price inelastic;
• the industry market has a complex structure.

Differentiation can be inherent in the following:

• the gap in prices for a differentiated product (service) relative to competitors with low costs is so great that it is not possible to maintain a loyalty to the brand;
• the role of the differentiation factor decreases as the product (service) becomes familiar;
• the perception of differentiation is reduced by the influence of counterfeits and imitations.
• 3. Focusing - focusing efforts on any market segment, consumer niche, characterized by special needs, with the aim of better than competitors' satisfaction. This strategy can rely on cost leadership, or differentiation, or both, but within the target market segment.

Focusing is attractive when:

• it is too expensive or difficult for most competitors to master this niche;
• the company does not have enough resources to develop broad market segments;
• industry segments differ significantly in size, growth rate and intensity of competitive pressure;
• there are relatively small groups of clients with non-standard needs that are not fully met.

Focusing risks include:

• the gap in prices in comparison with non-specialized products of competitors becomes very large;
• differences in the requirements for the goods of consumers of the target market segment and the market as a whole are reduced;
• competitors enter even narrower sub-segments within the target segment.

Depending on the life cycle of product (service) or enterprise development the following strategies are distinguished: concentrated growth, integrated growth, diversified growth, targeted reduction.

Concentrated growth strategies. This group of strategies includes:

• a strategy to strengthen the commodity position with an already mastered service (or a package of services) in an already mastered market, for example, through additional marketing or advertising efforts;
• strategy of searching for new sales markets for an already produced service (service package);
• strategy of developing a new service (package of services) in an already developed sales market.

Integrated growth strategies. This group of strategies distinguishes between:

• a reverse vertical integration strategy (integration with suppliers of resources required to produce a service);
• Forward integration strategy (integration with distributors, sales resellers and sales organizations).

Diversified growth strategies. Strategies with the following types of diversification are distinguished here:

• concentric diversification strategy (search for additional opportunities for the production and implementation of new services on the existing base of the old business; it remains in the center of the business);
• horizontal diversification strategy (production and sale of new packages of services, different from those used in the already developed sales market);
• strategy of conglomerate diversification (the organization is expanding through the production and sale of new packages of services that are not technologically related to those already produced; new services are sold in new markets).

Targeted reduction strategies. These strategies are used when an organization needs to regroup its forces after a long period of growth due to the need to improve efficiency during market downturns and dramatic changes in the economy. Their use is not painless for the enterprise. At the same time, certain variants of these strategies are considered as business renewal strategies. Substantively distinguish:

• a “harvesting” strategy (reducing procurement and labor costs, maximizing short-term revenue from selling available services);
• reduction strategy (closure or sale of divisions or businesses that do not fit well with the rest);
• cost reduction strategy (development of a number of cost reduction measures);
• business liquidation strategy.

 

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