The competitive strategy of the enterprise is 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 due to 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 to a narrow segment of consumers on any basis.

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

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

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

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

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

3. Options for combining the strategy of price leadership and differentiation are possible. Cost reduction methods for differentiation are the widespread use of standard components and parts, and the reduction of marketing costs. Companies charge a premium price compared to the pure price leader, but which will be lower than the pure differentiator.

Table 9.1

Characteristics of competitive strategies

	Product differentiation	Market segmentation	Distinctive competence
Price leadership	(mainly for the price)	(mass market)	Production and material management
Differentiation	(mainly by properties)	(many market segments)	R&D, sales and marketing
Focusing	Low to High (prices or properties)	(one or more segments)	All kinds of distinctive competence

Consider the content of basic competitive strategies.

Price leadership- this is an opportunity to offer more low price at the same level of profit, and in conditions of a price war - the ability to withstand competition due to better starting conditions. The price leadership strategy is good in the following cases:

Strong competition on price,

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

standard use of goods.

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

Analyzing the price leader by model competitive forces Porter, we can distinguish the following features:

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

The price leader is less sensitive than competitors to increased pressure from suppliers at the entrance and buyers at the exit: the mass market strengthens its position in the "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 over-indulgence in cost reduction;

The strategy is not suitable for all types of businesses.

Differentiation involves achieving a competitive advantage by creating products or services that are perceived by consumers as unique. In this case, companies can set a premium price. The strategy is implemented when consumer needs and preferences cannot be satisfied with standard goods or the previous composition of sellers. Differentiation can be achieved in many ways: unique product qualities, large selection , unique service, design, etc. There are the following types of differentiation:

Product differentiation is the offering of products with characteristics that are better than those of competitors;

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

Service differentiation is the offer of a higher and more diverse level of related services.

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

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

Powerful suppliers are rarely a problem, as the company is more focused on price than cost;

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

The main problem is the maintenance of uniqueness in the eyes of consumers, especially in terms of imitation.

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

Creation of a differentiating feature 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 notification of consumers about new product properties;

Misunderstanding or ignorance of properties valuable to the buyer.

Focusing involves working with a limited group of segments within which differentiation or a low-price approach is implemented. The application of the strategy is acceptable when:

There is a market segment that provides profit;

There is no interest in the segment from the leaders;

There are a sufficient number of segments in the industry, which allows you to choose the most interesting one.

Analyzing the Porter model of a company that focuses its activities, the following features can be distinguished:

A focused company buys 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 a company operates in may suddenly disappear due to changes in technology or consumer tastes.

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

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

There is a risk of the company being squeezed out by competitors;

The needs and demands of this segment may change;

A segment can be so attractive that it attracts the attention of many competitors.

Best Cost Strategy requires the company's experience and ability to simultaneously reduce costs and product differentiation. The goal is to offer the consumer a product of high value that meets expectations in terms of essential features and exceeds expectations in terms of price. The optimal cost strategy ensures success under certain market conditions. In markets where buyers are accustomed to high product differentiation but are price sensitive, a cost-benefit strategy is more effective than a cost leadership or pure differentiation strategy.

The concept and essence of competitive strategies

The strategy as such is a generalized model of the actions required to achieve the set goals through the coordination and allocation of the organization's resources. The strategy of the company's behavior in the market in a highly competitive environment is called "competitive strategy". The synthesis of the concepts of "competition" and "strategy" is reflected in Figure 1.

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

Competitive strategies are reflected in the desire of a business to take a competitive market position in industries where rivals are fighting. As a rule, they are aimed at achieving a stable and profitable position that would allow the business to withstand the onslaught of the forces that determine the competitive struggle in the industry.

Definition 1

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

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

Remark 1

Competitive strategy is always based on certain competitive advantages.

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

Achieving competitive advantage is achieved through the successful strategic actions of the company, protecting it from the impact of competitive forces and helping to become more recognizable in the market. Conventionally, they are divided into two types:

• internal;
• external.

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

Classification of competitive strategies

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

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

Cost advantage strategy or price leadership refers to the ability of the firm to achieve the lowest level of costs. 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 the price leadership strategy makes it possible to receive revenues that exceed the industry average, even in the face of a high level of competition in the industry. By earning a higher rate of return, the firm is able to reinvest it in maintaining and developing awareness of the product, or to set the lowest price for products.

A focus strategy or niche leadership means focusing all of a firm's efforts on a specific, narrow customer group. Its distinctive features are narrow specialization and limited sales markets among a small number of buyers.

Focusing strategies have two subspecies:

• cost focus strategy;
• differentiation focus strategy.

The cost-focused strategy assumes that the firm, operating in its target segment, seeks 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 creation of a new product that is unique to the industry. This type of strategy is based on the creation of a new product (service) with unique properties, or the improvement of a conventional standardized product in order to sell it at a higher price and obtain a higher profit margin.

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

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 desired advantages, as well as the scale of strategic goals within which these advantages are planned to be obtained. The choice of how to achieve the goal is a key decision about the 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. 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 planned marketing program, and functional business strategies are formed ( product strategy pricing, promotion and implementation strategy). On their basis, a planned marketing budget is built, and the total cost of implementing a competitive strategy is determined. After that, a forecast of the performance of the company is built.

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 achieved are calculated and evaluated.

“In order for a company to generate a stable growing income, it needs to achieve leadership in one of three areas: in a product, in price, or in a narrow market niche,” said Michael Porter, presenting his theory of effective competition to the whole world. In the 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 strategies we have considered 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.

A leading professional in the field of competition strategy is Michael Porter. 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. A competitive strategy is a list of actions that a company takes to get more high profit than competitors. Thanks to an effective competitive strategy, the company attracts consumers more quickly, incurs lower costs for attracting and retaining customers, and receives a higher rate of profitability (marginality) from sales.

Porter distinguished 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.

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

Based on such a matrix, Michael Porter identifies 3 main strategies for a 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 an industry;
Competitive cost leadership strategy or price leadership means the company's ability to achieve the lowest level of costs;
Competitive focus strategy or niche leadership means focusing all of the company's efforts on a certain narrow group of consumers.

This classification of Porter's competitive strategies is very general and suggests that businesses 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 its competitive strategy is "stuck in the middle", does not operate efficiently and operates in an extremely unfavorable competitive situation. A company without a clear competitive strategy loses market share, manages investments poorly, and earns 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 profit; and on the other hand, it can't get buyers interested in specific product features because it doesn't focus on developing differentiation or specialization.

If your company has not yet decided on the vector of competitive strategy, then it's time to rethink the key goals and objectives of the business, evaluate 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 form a tactical action plan to increase the competitiveness of the business.

Competitive Advantage Strategy

Competitive strategies are the key to market success. Therefore, in order to win a better market position, establish a brand and achieve advantages in relation to competitors in the market, one should use the strategy as a basis in obtaining the benefits of competitive advantage.

To create competitive advantages, there are the following strategies.

Cost leadership strategy. In this case, the development and production of the product in the center of attention are the costs. This strategy is also known as Price Leadership.

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

To create price advantages practice:

Reducing unit costs by increasing production volumes, thus achieving economies of scale.
Rational business management, optimization of intercompany communications.
Savings on diversity 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 features.

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

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

Establish cost-effective scale production facilities;
reduce costs based on experience gained;
tighten control over production and overhead costs; * avoid small transactions with customers;
obtain special access rights to sources of raw materials;
minimize costs in areas such as research and development, service, distribution system, advertising and others Marketing communications.

This strategy provides the company with the following benefits:

Protection from suppliers;
protection from buyers of products (they can bring down prices only to the level of competitors' prices);
an obstacle to entry into the market of competitors;
advantageous position relative 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 methods and emerge victorious. The strategy may be an effective response to the actions of competitors, but it does not provide a guarantee against defeat.

Differentiation strategies. When they try to give a product certain distinctive features, some unusual functional properties, unique characteristics what the customer is likely to like, demand, value, and be willing to pay for, even if similar competitor products cost more.

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

It is impossible to create a competitive advantage through pricing strategy alone. There should be a certain pricing limit below which it is impossible to fall in order to avoid financial losses and maintain profitability. While the quality of a product can be improved indefinitely, if only it would be more advantageous 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. Most often, companies use a differentiation strategy to raise prices, because differentiation leads to higher production costs. As a result, profits increase slightly, but not necessarily.

While differentiation while maintaining prices always contributes to an increase in sales due to the number of products sold or due to the stabilization of consumer demand.

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

Design or brand prestige;
special technology;
functionality;
terms of service for consumers;
dealer network;
other options.

In this situation, consumers develop loyalty to a particular brand, and the products offered by firms that adhere to a differentiation strategy are not easy to find a replacement. Financial reserves are also emerging to search for alternative sources of inputs.

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

Increased investment in research and development;
increased costs for design and customer service;
more expensive raw materials are purchased;
customer tastes and preferences may change over time.

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

This strategy is appropriate if there is a goal to satisfy some unusual need of a certain group of people by creating and marketing a specialized product. It is also possible to create a specific system for accessing a product, such as an innovative system for selling or delivering a product, and thus create a competitive advantage.

Similarly, this strategy can be "strengthened" by a pricing strategy and a differentiation strategy, but not made related.

Production diversification. This strategy includes:

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

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 market conditions, improves and adapts its products to changing conditions and demand, ensures the necessary level of profitability.

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

In order to become a "pioneer" it is not necessary to create a new product "from scratch". It is entirely possible for an old product to develop and implement new technologies, upgrade existing tools or mechanisms, or quickly understand and respond to new customer needs and demands.

Stuck in the middle position. The company can choose any of the strategies. Porter believes that each of them is a spectacular way to counter competitors, but advises to stop at only one. Otherwise, the company risks becoming stuck in the middle, which will inevitably lead to loss of market share, low profits, conflicting organizational structures and weak motivation.

Enterprise competitive strategies

A competitive strategy is a generalized model of actions and a set of rules that an enterprise should be guided by when making decisions in order to achieve and maintain competitiveness in the long term.

The strategy sets a certain framework that makes it possible to identify and evaluate changes in the external and internal conditions for the development of the system and the need for its improvement due to these changes.

The strategy, as a means to achieve long-term goals, focuses on the forecast of the behavior of the external environment and, in this regard, the analysis of the possibilities for 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 goals.

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

When possible, strategies are distinguished - typical and original.

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

Corporate strategy is overall strategy corporations as a whole.

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

The functional strategy is carried out across the enterprise in 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 commuters, patients, violents, explerents, litalents are distinguished, which reflect a specific type of biological behavior of the enterprise and have a corresponding analogy with the behavior of biological systems.

Commutators, or "Gray Mice", are small, flexible enterprises that easily adapt to change. market demand. Often they offer goods (services) - imitators, goods (services) - fakes, are not firmly tied to a specific field of activity, easily move from one market to another. Possess low stability in the market. Flexibility and adaptability form the basis of this competitive strategy.

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

Patients, or "Cunning Foxes", are highly specialized enterprises with quantitative growth (staff, communications, divisions) that have mastered well one of the niches (need areas) of the market. Not very large enterprises that have been producing goods and services of a certain type for many years. The competitive strategy is based on narrow specialization, low costs and high quality of goods (services).

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

Explerents, or "Moths", are start-up, 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. Effectively operate as venture divisions of large enterprises or their subsidiaries. The basis of activity is new ideas, external financial support.

Litalenty, or "Dying", are enterprises with an overly complicated, inefficient structure, a decline financial indicators. They need a quick re-profiling to a new business, new technologies, new markets, a focus on 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 designed and implemented.

The defensive strategy is aimed at maintaining the competitive position of the enterprise in the already developed sales markets. The main function of the strategy is to activate the cost-benefit ratio with own benefits and benefits for buyers. Competitive struggle with such a strategy is not based on the originality of the product (service) or technology, but on their price, supply volumes and quality.

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

1. Cost leadership provides protection against all five forces of competition:
the company is able to make a profit at the lowest possible price for competitors;
low costs create an entry barrier for new competitors and substitute products;
low costs protect the enterprise from the actions of strong suppliers, providing greater flexibility in case of price increases by them;
strong consumers are not able to achieve price reductions below the level acceptable to the strongest competitor.

Low cost leadership is effective in 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 cost leadership has the following risks:

Technological changes that devalue previous experience and investment;
the ability to copy the competitive advantages of leadership in terms of costs by competing enterprises;
inability to timely make changes to the product due to an exaggerated attention to costs.

2. Product differentiation targets buyers who are willing to pay more for higher quality or more wide selection consumer qualities of goods (services).

Differentiation can be horizontal (differences in goods or services in terms of 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 the five competitive forces, but in a different way:

In relation to competitors, differentiation reduces the possibility of replacing a product, increases consumer brand loyalty, reduces price sensitivity and thereby increases profitability;
distinctive properties of the goods and the won loyalty of clients protect the enterprise from goods-substitutes;
increased profitability increases resistance to possible increase price strong supplier.

Differentiation is attractive under the following conditions:

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

Differentiation may include 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 under the influence of fakes and imitations.

3. Focusing - focusing efforts on any market segment, consumer niche, characterized by special needs, in order to better satisfy them than competitors. This strategy can be based on cost leadership or differentiation, or both, but within the target market segment.

Focusing is attractive when:

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

Focus 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 development of a product (service) or enterprise, 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 a product position with an already mastered service (or a package of services) in an already mastered market, for example, through additional marketing or advertising efforts;
a strategy for finding new markets for an already produced service (service package);
strategy for developing a new service (service package) in an already developed market.

Integrated growth strategies. This group of strategies includes:

reverse strategy vertical integration(integration with suppliers of resources necessary for the production of services);
forward integration strategy (integration with distributors, resellers and trade organizations).

Diversified growth strategies. Here, strategies with the following types of diversification are distinguished:

The strategy of concentric diversification (search for additional opportunities for the production and sale of new services on the existing base of the old business; it remains at the center of the business);
horizontal diversification strategy (production and sale of new service packages that are different from those used in the already developed sales market);
conglomerate diversification strategy (the organization expands through the production and sale of new packages of services that are technologically unrelated to those already produced; new services are sold in new markets).

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

A "harvest" strategy (reducing purchases and costs for labor force, obtaining maximum income in the short term from the sale of existing services);
downsizing strategy (closing or selling divisions or businesses that do not fit well with the remaining ones);
cost reduction strategy (development of a number of measures to reduce costs);
business liquidation strategy.

Competitive strategy of the firm

According to the so-called biological approach proposed by the Russian scientist L.G. Ramensky, there are strategies for ensuring the competitiveness of an organization: violet, patient, commutative, explerent (table below).

Violet strategy involves 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 amount of demand. The violet strategy is typical for large companies that dominate the market and outperform 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 targeted at the average buyer. A violent strategy can be pursued by large organizations with a stable reputation, which have gradually mastered significant market segments.

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

Characteristics of the strategy	Strategies
	violet	patient	commutative	explerent
Needs Oriented	mass standard	relatively limited, specific	local limited	innovative
Type of production	mass, large-scale	specialized, serial	universal, small-scale	experimental
Company size		large, medium, small		medium, small
Level of competition
Company stability in the market environment
Relative share of R&D spending			absent or small	high, dominant
Competitive Advantage Factors	high productivity, low unit costs	benefits from product differentiation	flexibility	advance in innovation
Development dynamics	high, medium
Type of innovation	improving	adaptive	missing	breakthrough, cardinal
Range				missing

The patent strategy is to serve narrow market segments with specific needs based on 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 prices for wealthy buyers, which makes it possible to receive significant profits with small sales volumes.

Competitiveness is achieved by the sophistication of the product that satisfies delicate tastes and requests, quality indicators that surpass the quality of similar products of competitors. The switching strategy is designed to satisfy not rare, but rapidly changing, short-term needs of consumers in goods and services. The switching strategy is aimed at adapting to the limited demand of the local market, meeting rapidly changing needs, and imitating new products. Therefore, the commutation strategy is primarily characterized by high flexibility, which imposes special requirements on the restructuring of production for the production of periodically updated products. Typically, such a strategy is followed by non-specialized organizations with fairly versatile technologies and limited production volumes, when the implementation of this strategy does not aim to achieve high quality and sell at high prices.

An explerent strategy is focused on radical innovation and entering the market with a new product. The exploratory strategy is based on achieving the competitive advantages of the organization through the implementation of constructive and technological innovations that allow them to stay ahead of competitors in the release and supply of fundamentally new types of products to the market, by investing in promising, but risky innovative projects. Such projects, if successful implementation allow not only to surpass rivals in the quality of products presented on the market, but also to create new markets where for a certain time they may not be afraid of competition, since they are the only producers of a unique product. The implementation of such a strategy requires a significant initial capital, scientific and production potential, and highly qualified personnel. The introduction of innovations is one of the radical means of obtaining competitive advantages, contributing to the monopolization of the market. Discoveries, inventions and other innovations make it possible to create new market with the prospect of rapid growth and great opportunities for the company. The vast majority of modern market leaders appeared precisely as a result of the development and use of innovations that lead to revolutionary changes in the market situation. An example is leaders in the aviation, automotive, electrical industries, as well as in the field of computer technology, development software, which arose from small pioneer enterprises, whose innovations at one time literally “blew up” existing markets.

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

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

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

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

Benefits of an exploratory strategy:

Blocking entry into the industry during the validity of the rights to innovation;
the possibility of large volumes of sales and obtaining excess profits. Exploratory strategy risks:
great uncertainty in 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 flaws in the innovation.

Development of a competitive strategy

Competitive strategy is a tool in the hands of enterprise managers to achieve the intended goal. 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 case of certain actions of competitors. In other words, it creates conditions for the coordinated work of managers of various departments to achieve common corporate goals. And in the market, the company's actions become interconnected and purposeful.

The general idea of ​​developing a competitive strategy is a program of action that allows you to get a positive economical 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 the basic principles, that is, the rules for the formation and implementation of a strategy in the market:

Succession and accumulation;
the sequence of steps (stages) to be performed;
cyclicity.

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

The sequence is caused by the dependence of the subsequent stage on the results obtained at the previous one. This will help avoid mismatch between the competitive strategy and market conditions, mistakes that have already taken place in the past, and evaluate 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 tasks and problems that the company faces:

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

Currently, 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 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 environment of the enterprise.
4. Choice of competitive strategy of the enterprise in the market.
5. Analysis of the chosen strategy.
6. Implementation of the competitive strategy through the developed plan.
7. Analysis of the results of the implementation of the strategy.
8. Adjustment existing strategy or the development of a new, more effective strategy that will be able to implement the tasks set by the enterprise's overall corporate strategy.

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

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

At this stage, it is necessary to determine the nature of the competition (for example, offensive or defensive), who exactly needs to be squeezed out on the market, who (for example, competitor "A") can be forced to divert their resources from 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. At the same time, it must be remembered that only the hierarchy of strategic planning at the enterprise (general corporate strategy - competitive strategy in the market) allows you to effectively conduct 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, labor resources. As a result, a change in the situation in one market can affect another market, and, accordingly, its participants.

In the development phase, the tasks that were formulated by the company's management are communicated to the functional unit responsible for marketing and sales. In the future, 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 corporate objectives that were formulated by the management, as well as from the point of view of the enterprise's capabilities. The marketing competitive strategy, as noted above, is determined based on external factors (analysis of environmental conditions) and internal factors(available company resources). In order to get a clear assessment of the internal capabilities of the enterprise and the situation on the market, you can use the SWOT analysis.

The use of SWOT analysis is necessary to systematize the available information and subsequent adoption management decisions. Therefore, SWOT analysis can be called an intermediate link between the formulation of a competitive strategy for an 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 enterprise and the market situation in order to understand whether the enterprise will be able to implement the chosen competitive strategy, and how this 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 evaluating 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 coordination is necessary to ensure 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 (in order to force them out of the market) or the absorption of some of them can significantly increase the company's market share, but at the same time exceed the antitrust laws or the costs incurred will not be able to pay off.

If the competitive strategy satisfies all the requirements, the process of developing a competitive strategy moves into the implementation phase. In this phase, the developed strategy is put into practice - marketing and sales specialists of the enterprise act in 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 implementing a competitive strategy, the structure of which is proposed below:

1. Summary. This section of the competitive plan is drawn up as the last one and should begin in a finished form 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 understand 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 past period. Actual and planned results of the previous period. Analysis of the results of the past period. Description of the reasons for non-fulfillment or overfulfillment of the plan.
5. Setting goals and describing the chosen strategy. The competitive strategy is determined based on the results of a study 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 the analysis of the external environment and internal capabilities of the enterprise (SWOT analysis). In addition, the selected competitive strategy must be considered for compliance with corporate goals. Here you should also characterize the chosen competitive strategy, give a description necessary conditions successful completion of the competitive plan and possible reasons that could interfere with its implementation.
7. Plan for the implementation of the chosen competitive strategy.

This section should state:

A. Quantitative goals that determine absolute sales volume 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 base indicator of the planning period is the company's market share, which is planned to be taken 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 subsequently analyzing the effectiveness of the competitive strategy after the planned period. The activities should also take into account such points as the need to conduct tests, standardization, presentations, secondment of specialists for specific purposes (conducting market research, negotiating, participating in exhibitions, providing and developing after-sales service, etc.). Each event is assigned deadlines, 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 first step in the chosen direction is taken. The main task of the competitive plan is not only to indicate the direction, but also to describe the route, the procedure for achieving the set goals - conducting research on 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 the enterprise.

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

Key questions to be answered:

Correctness of the chosen strategy?
competitor reaction?
the correctness of the planned activities and to correlate the results obtained and the planned ones?
the effectiveness of the tasks?
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 the strategic planning of an enterprise, meanwhile it is directly integrated into it and is an integral part of it. submitted step by step algorithm development of a competitive strategy and a plan for the implementation of the developed strategy make it possible to establish a closed cycle of competitive strategic planning.

Competitive Strategies

Competition is a given that any business has to take into account. The competition for the end customer in the market is constantly going on, it uses all possible tools and resources of the company. A company that does not compete, does not oppose competitors, is doomed to lose market share. In the 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 competition in the industry.

Competition is actions aimed at maintaining and increasing the company's market share. The minimum goal of competition is to keep current customers and prevent them from switching to competitors. The maximum goal of competition is to select buyers from the main competitors of the company.

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

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

The basic rules of competition are in 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 volume 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 run. You must use legal means of competition and abide by legal regulation countries.

So, let's move on to a description of all possible tools of competition. Competitive struggle does not always mean aggressive methods of work and tough confrontation. Competition can be either active or 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 confronting the main competitor in order to capture market share. By choosing this way of competing, 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 an increase in the profitability of the company with a slight increase in market share. Having chosen this type of competition, the company begins to look for ways to peacefully exist with large competitors and focuses on small free niches in the market.

The way in which a company decides to confront competitors depends on the size of the business and on the resource capabilities of the firm. In the article, we will consider the main types of competition with which any company can win even in the face of the fiercest competition in the industry.

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

Frontal attack. A frontal attack strategy means using against a key competitor the same means that it uses itself in the development of its product, but with greater intensity. Higher intensity allows you to achieve superiority over competitors (in price, product, advertising), which should later be translated into a competitive advantage. Not used for frontal attacks. weak sides competitor.

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 him less visible or completely invisible in this channel. If your competitor releases a new product, you release an alternative offering that is better product competitor.

Flank attack. Flank attack strategy - using one of the weaknesses of the leader to achieve competitive advantages. For example, increased activity in a particular region, distribution network, where a competitor has a weaker position. A common example of a flank attack is to offer a product comparable to the leader, but at a lower price. Environment. The environment strategy involves the gradual accumulation of advantages by studying the weaknesses of the main competitor. It is very long in time, but ideal for small companies. Encirclement is very comparable to a flank attack, but is carried out more consistently and discreetly.

Concentration of forces on separate segments. Such a 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 purpose 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 a rebuff from the main market players.

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

They focus only on certain segments of the market and never aim to cover the entire market;
should focus on the development of technologies only in the direction of reducing costs and basic expenses;
focus on profit rather than sales and market share.

Strategy for copying successful products. Also known as the false mushroom strategy. It consists in creating a "full copy" successful product and sell 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 market segment (comparable to niche leadership strategy in Michael Porter's competition models) Small market strategy is the most commonly used passive strategy. Saving positions. The strategy is to maintain a consistent market activity without attracting the attention of major competitors.

participation strategy. Participation strategy means the involvement of the company in the production of the product of the main company - competitor. For example, firms producing covers for car companies.

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

Types of competitive strategies

Any business strategy, 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 better position relative to rivals in the competition and attracting customers. There are many different competitive advantages: the advantage of higher quality products, providing customers with a wider range of services, selling goods at relatively low prices, a more advantageous geographical location, producing products that have no equivalent, producing more reliable and durable products, providing more services. per purchase (combination of high quality, good service and moderate price). Whichever strategy a company chooses, if it is to achieve a competitive advantage, it must draw the attention of consumers to its products by providing more "value" than the buyer 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 the customer's estimates suggest, even with a premium markup.

This topic is about how a company can gain and maintain competitive advantage. First, the main types of competitive strategies are considered and how they lead to positions of market advantage.

A competitive strategy is a set of specific steps and approaches that a firm takes or intends to take in order to compete successfully in a given industry. Or the same but more in simple words, the firm's competitive strategy shows how the company's management tries to soften the blows of competitors and thereby withstand the destructive action of the five forces of competition. Depending on the situation, the strategy may be predominantly defensive or predominantly offensive.

Companies around the world are armed with truly fantastically elaborated all conceivable and unthinkable ways to gain 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 conduct of competition:

1. The desire to have the lowest production costs in the industry (leading strategy 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, and not on the entire market (focus strategy, or niche).

The incentive to have the lowest cost of production in the industry is the presence of a large number of price-sensitive buyers in the market. The idea is to gain a sustainable advantage over competitors in terms of production costs and use it as a basis for price dumping and increasing market share, or earning a higher rate of return by selling goods at prevailing market prices. A cost advantage can translate into higher profit margins only when it is not wasted on undercutting competitors' prices in order to increase sales accordingly. Winning a leading position in the field of production costs means making the goal of reducing costs a leitmotif of the firm's overall strategy - although this does not detract from the importance of 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 competitive advantage in this area:

Purposeful work to reduce costs and increase production efficiency;
revision of the overall cost structure and rejection of the most expensive and least efficient technological operations.

Both approaches should be carried out simultaneously. As a rule, low-cost producers try to use every opportunity to reduce costs that presents itself. Their activities fit into a particular administrative culture: spartan equipment, meager tips, low bonuses to managers, zero tolerance for waste, a scrupulous review of the organization's budget, the implementation of a system of broad employee participation in reducing production costs. But even though they are extremely frugal in their spending, companies of this type do not skimp on investing in resource-saving technologies.

A firm that claims to be a low-cost producer must carefully analyze each stage of cost increment.

Then she should use what she has learned about the reasons for the increase in costs and be creative in finding ways to reduce them. Wherever possible, production operations that lead to a sharp increase in costs should be abandoned. As a result of the implementation of such measures, the company can achieve tremendous success in reducing production costs. Illustrative box 10 provides a story of two companies gaining a strong competitive position by redefining the traditional industry cost structure.

Examples of firms successfully pursuing cost reduction strategies include Lincoln Electric for arc welding equipment, Briggs and Stratton for small internal combustion engines, NIR for ballpoint pens, Black and Decker for tools, Manufecchurin Design for dishwashers (famous in market under the brand name CIARS KENMORE), Beard - Pulan - chain saws, Ford - heavy vehicles, General Electric - a variety of household appliances, VOL-MART - retail goods, Southwest Airline - commercial air transportation.

The position of the low-cost producer in the industry offers protection from the five forces of competition:

Compared to competitors, a company with low production costs is in the most favorable conditions for price competition, protection from price wars, using the advantage of a lower selling price as a tool to capture the rival market, making above-average profits (due to more high profitability or more sales) in markets where price competition prevails. The producer with low production costs has a decisive voice in setting the price level for the industry's products;
in relation to buyers, a company with low production costs in the industry is protected from the action of strong customers, since buyers are unlikely to bring the price down to the level of survival of the next sellers in the rankings;
relative to suppliers, a low-cost producer is more protected than competitors from the actions of powerful suppliers if its high efficiency own production- the main source of advantage in the field of production costs;
With respect to potential newcomers, the low cost producer may use price reduction tactics to make it harder for new competitors to win customers, the price power of the low cost producer acts as a barrier to potential newcomers;
With respect to substitute products, the low-cost producer is in a better position than competitors because it uses a low price against attempts to enter the market with substitute products.

Once price competition becomes the dominant force in the marketplace, firms with relatively low production costs have a significant advantage in attracting buyers whose buying decision is based primarily on price.

A cost-benefit competitive strategy is particularly effective in the following cases:

1. Price competition among the sellers main force competition.
2. Industry-produced product - mostly standard, easy to obtain from a wide range of sellers (conditions that encourage buyers to buy at lower prices).
3. Very few opportunities for product differentiation or, in other words, buyers care little about brand differences.
4. The vast majority of buyers use the product in the same way, as a result, a standard set of buyer requirements for this species products.
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 mostly large and have significant purchasing power.

However, a low cost strategy is risky and has a number of weaknesses. A breakthrough in technology can lead to lower costs for competitors and thereby devalue the firm's investment in lowering production costs, nullifying the value of efforts to improve production efficiency. Competing firms can duplicate the path of a cost-cutting manufacturer relatively easily and inexpensively, thereby rendering any advantage in this area short-lived. A company focusing on reducing production costs becomes fixated on the task of reducing costs so that it often does not respond properly to some emerging significant changes - for example, growing consumer demand for additional services and quality parameters, subtle shifts in the nature of product use, reduction the sensitivity of buyers to the price level - and thus, is losing ground as consumer demand switches to other differentiating features.

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

Differentiation strategies are appropriate when the needs and tastes of customers differ too much from customer to customer and therefore cannot be satisfied by producing a standard product. A manufacturer that successfully applies the principle of differentiation carefully studies the behavior and needs of customers in order to ascertain the opinion of customers regarding the value and significance of certain features. After that, the company differentiates its products according to one or maybe several characteristics, thereby stimulating the preference of buyers for the products proposed by the company. Competitive advantage is the result of a company's unique (compared with its competitors) ability to meet the needs of buyers who prefer one or another feature of their products.

Successful differentiation allows the firm to:

Set a premium margin on your products;
sell more products (because more buyers are attracted);
make the brand of the company more popular among buyers (because a certain number of buyers are strongly attached to differentiating features).

Differentiation promises additional profit if the premium margin can absorb the additional costs associated with differentiation. Differentiation does not bring the desired results if the features underlying product differentiation are not valued by buyers so highly as to recoup the firm's additional costs of differentiation.

Ways to differentiate a company's products from those of competitors can be in many ways: different tastes (Dr. Pepper and Listerine), special features (Jan Ears - on-board stoves with built-in grill), super service (one-night mail delivery by Federal Express), supply of spare spare parts (Caterpillar guarantees the delivery of spare parts in 48 hours anywhere in the world or, in case of failure, free of charge), everything for the consumer (McDonald's), super design and execution (Mercedes in the automotive industry), prestige and originality (Rolex in the manufacture of watches) , product reliability (Johnson and Johnson in children's toys), manufacturing quality (Karastan in clothing and Honda in automotive), level of technological performance (ZM Corporation in bonding and lining products), full service (Merrill Lynch), full range products (Campbell in the soap industry), 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 its products are a potential basis for differentiation. Once the price gouging factors are identified, features that can add value to the product begin to be developed (at a reasonable cost). The firm may also develop features that increase the productivity and efficiency of its products. In addition, it is possible to develop features that cause a feeling of satisfaction of the buyer during the use of the intended product. Opportunities for differentiation can occur anywhere along the production chain. Yes, McDonald's has high rating cooking French roasts, which is partly due to the company's strict commitment to buying a particular variety of potato. The quality of Japanese cars is due mainly to the ability of the Japanese to work according to a well-established quality control system. IBM enhances the value of its products in the eyes of customers by providing its customers with a comprehensive range of services and technical support. Clients L.L. Bin feel safe ordering goods by mail, as the company takes full responsibility for the delivery of goods to the recipients: "We guarantee that all our products will give you one hundred percent satisfaction. You can return the product you do not like at any time. We will replace it, we will refund the price you paid, we will credit your credit card if you wish." Commercial airlines use off-peak space (i.e. extra capacity) to reward their regular customers(free flights).

Differentiation acts as a shock absorber for competing firms' strategies because customers become attached to a brand or model and are willing to pay a little more (and sometimes a lot more!) for the product they love.

In addition, successfully carried out differentiation:

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

To the extent that differentiation allows for higher prices and margins, the manufacturer is in a stronger economic position to withstand supplier pressure from higher raw material prices. Thus, just as with a 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 considered to be those whose imitation by competitors requires a significant investment of time and money. Here the presence of exceptional perfection plays a big role.

If the firm has mastery and competence in any area 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 greater range of related services;
providing consumers with more "value" for the same price.

In general, differentiation strategies are best applied 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. customer needs for this product are different, 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 a 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 a differentiation strategy, is nothing more than a reflection of the actual value and subjective assessment by the buyer of the products offered. The difference between the actual cost and the subjective assessment occurs 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 based on incoming signals in the form of: a verbal recommendation of the seller, the attractiveness of the package, the intensity of advertising, the content of the advertisement and the created advertising image, the form of presentation of information in brochures and brochures, the association associated with the name of the seller , the seller's customer base, the market share of the firm offering the product, the length of time the firm has been in the market, the price charged (where the value of the price is indicative of "quality"), professionalism, appearance and the personality of the seller.

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

1. the nature of differentiation is subjective and difficult to quantify,
2. buyers are purchasing the product for the first time,
3. a repeat purchase of this product is unlikely,
4. Buyers are not burdened with experience.

A vendor with a very modest true value differentiation strategy but strong price signals will often sell successfully at higher prices than a competitor with a higher intrinsic value but weak price signals.

Attempts to implement differentiation, as a rule, involve 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 return on production as a whole 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, as a result of the differentiation, the volume of sales has increased significantly).

By 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, based on the amount of additional costs, will be too high for buyers. From a cost point of view, a differentiation strategy is justified if, as a result of its implementation, the firm gains a competitive advantage in the field of production costs or establishes a premium margin that more than covers additional costs.

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

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

In addition, a differentiation strategy does not bring the expected results if competitors can easily learn from the experience of differentiation. The ability to quickly imitate indicates the absence of true differentiation, as competing firms make similar changes, nullifying all attempts by the manufacturer to achieve uniqueness. Thus, for differentiation to be successful, a firm must find a reliable factor of uniqueness that cannot be easily and quickly imitated.

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

An attempt to differentiate on the basis of features that do not reduce costs and increase customer satisfaction as they expected;
too high a 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 demand;
an attempt to set a too high premium markup (the higher the markup, the more buyers may be tempted by a competitor's cheaper product);
ignoring the meaning of price signals and emphasizing the meaning of only the actual value;
misunderstanding of the point of view of buyers regarding the valuable qualities of the product.

Concentration begins with the choice of a market niche, characterized by certain requirements and preferences of buyers. A niche can be identified due to geographic location, special requirements for the use of products, or due to specific product properties that satisfy niche consumers. The basis for successful competition when applying a strategy of concentrating in serving a niche is either lower costs than competitors, or the ability to offer niche consumers something different from competitors' products. The success of a cost-reduced concentration strategy depends on having a target market segment whose needs can be met at a lower cost than the rest of the market. The success of a concentration strategy based on differentiation depends on the presence of a target market segment that requires products to have some special qualities.

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

Market segments that are favorable for the use of a concentration strategy should have one or more of the following characteristics:

The segment is large enough to generate profit.
The segment has a high potential for development.
The segment will not bring success to most competitors.
A segment-focused firm has the skills and resources to effectively serve the segment.
A segment-focused firm can protect itself from competitors through established good relations with customers and the best customer service capabilities in the segment.

The use of special methods of concentration in serving the target market niche is the basis of protection against five competing forces. Competitors do not have equal opportunities serving the target clientele of the firm using the concentration strategy. The special techniques of a firm that uses a concentration strategy give it a competitive advantage that prevents entry into its market niche. Her special moves are also a hindrance to those who wish to replace her. To some extent, the failure of powerful clients to close business deals depends on their reluctance to start doing business with firms that are less able to meet their needs.

Concentration works well if:

1. serving a 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 company's resources do not allow it to successfully serve a large segment of the market;
4. when industrial sectors(segments) vary widely in size, maturity, profitability, and intensity of five competing forces that make some segments more attractive than others.

The use of a concentration strategy is sometimes risky. It admits, firstly, the possibility that the broad masses of competitors will find effective ways and be able to oppose themselves to the concentrating firm in serving a narrow target market. In the second case, it is possible that the needs and preferences of niche buyers will gradually shift towards those product qualities that the market as a whole requires; this blurring of differences between buyers of different segments opens the door for a variety of competitors to invade the target market of the firm concentrating 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 realize it, price-insensitive money consumers will have a huge number of firms to choose from, 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. The transfer of interest from a broad market to a limited segment usually means a sharp reduction in production volumes. This can lead to extremely high unit costs if you don't cut the overheads that have to match the lower output that is driven by the narrower customer base. This way you can finish your activity. Under pressure from both prices and costs.

Formation of a competitive strategy

In the course of developing a competitive strategy, one should remember about the planning hierarchy - the strategy should reveal the stated goals and objectives of the enterprise. To do this, building a strategy must begin with an analysis of the current situation on the market and your own position on it. After collecting and analyzing information about the market and competitors, response actions are developed - strategies. But it is worth noting that the finished strategy itself is not the result and ultimate goal development of a competitive strategy, it is very important to analyze its implementation and the lessons learned. Subsequently this analysis be the starting point for future strategy development.

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

The continuity of the competitive strategy lies in the fact that the company, even before developing a strategy, must analyze previous experience, find out what actions had a positive effect in the competition and check their relevance at the current moment. In addition, the study of past experience will allow the company to avoid old mistakes when developing a new strategy.

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

The cyclic nature of competitive strategic planning is manifested in the fact that the results of the implementation of a 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 components are a good tool in the hands of managers, as it allows you to solve a number of tasks and problems that the company faces. Firstly, the available analytical material, obtained and structured during the formation of the strategy, allows both management and performers to clearly see the situation on the market, the position of the company on it, the reality of the goals and ways to achieve them. Secondly, approved by the company's management ( CEO), the competitive strategy acquires the force of an organizational and administrative document. And, finally, thirdly, by analyzing its activities in past periods, the 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 implemented competitive strategy are:

Definition of the strategic area of ​​the company's management - the mission and strategy of the company;
Preliminary objectives - based on previous experience and corporate strategy.

They set the direction of action in the competitive struggle:

Collection of information about the external and internal environment;
Structuring information 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 chosen strategic alternative;
Implementation of competitive strategy - competitive action plan;
Monitoring the achievement of goals and the implementation of the plan;
Analysis of the experience gained and the implemented strategy - accumulation of experience.

A sequence of systematic actions can help determine strategies when the stakes are high and the resource costs to the firm are significant. This reduces the risk of missing 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 point of view of the author, opens up new horizons for analysts. The new approach lies in the fact that initially agreed with the company's mission, as well as with corporate objectives, the final competitive strategy 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 can use any type of competitive behavior:

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

All activities of the firm are subject to competitive strategy. The system of actions of the company is subordinated to this concept, aimed at achieving the final goals. Any company uses two strategic settings - the installation of market monopolization (monopolization strategy) and the entry of 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 one's 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.

If we are talking about the role function of the company, then the following types of competitors are distinguished:

1. Leaders. They are forced to repel the attacks of other leaders and use similar methods of frontal, complex, i.e., in several directions at once (advertising, prices, etc.), and flank struggle (in one direction).
2. Applicants for leadership. Detect significant offensive potential. An attack on the positions of leaders can be frontal or flank in nature.
3. "Wingmen". They do not compete with groups 1 and 2, they follow the path beaten by the leaders.
4. Beginners. They aim 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 gain a foothold in certain niches.
3. Small and medium-sized firms that carry out mass production, thanks to which they are ahead of their rivals.
4. Small universal firms that use the effect of flexibility and high maneuverability in competition with other companies.

Purpose of competitive strategy

The goal of a competitive strategy is to achieve superiority over competitors in providing consumers with products and services that are in demand and thereby gain competitive advantage and market leadership. In addition, competitive strategy includes offensive and defensive actions, the allocation and reallocation of resources to maintain long-term competitive opportunities and advantageous competitive position, as well as tactical actions taken when market conditions change. Businesses around the world are trying to develop unorthodox competitive strategies. Since a company's competitive actions are tailored to the characteristics of its market position 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, 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.

A competitive strategy is a set of practices and initiatives aimed at attracting and satisfying customers, resisting 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 management plans for solving the entire range of strategic tasks.

The main goal of the competitive strategy is to form a certain level of enterprise competitiveness. 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 increasing competitiveness or maintaining it at the current level. From this in the future depends on the direction of development of specific management techniques and methods. In any case, the objective of the competitive strategy must be in line with common system management used in the enterprise.

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

The next stage of the algorithm for forming a competitive strategy involves the formation of strategic alternatives, which are scenarios for ensuring the competitiveness of an enterprise with the corresponding predictive values ​​of competitiveness indicators.

Development of options for the development of the enterprise and forecasting key indicators allows you to make a possible choice of the motion vector. One of the options for the development of the enterprise is the prolongation current position an economic entity with a corresponding transfer of the existing dynamics of key indicators for the forecast period. Thus, the first scenario is passive in nature, not involving significant changes in economic activity subject. An alternative development option provides for the growth of predicted indicators as a result of the implementation of measures 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 existing “weak points” of the enterprise or based on existing competitive advantages.

When developing a strategy, it is necessary to calculate the predicted values ​​of key indicators. At the same time, the values ​​obtained according to the strategic scenario are taken as target indicators of competitiveness.

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

Monitoring the implementation of measures consists in analyzing the actual values ​​of the indicators of the implementation of the strategy and comparing them with target values.

Thus, the algorithm for the formation of a competitive strategy for 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 derived from external competitive advantage that rely on a firm's marketing know-how, 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 in the eyes of consumers than competing products.

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

With 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”. It can be design features or product performance, 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.”

Differentiation focuses 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, other strategies must also be used so that the buyer is convinced of the features of the product so much that he is ready to pay for it a price higher than that of similar products from competitors.

"The essence of a differentiation strategy is to find ways to be the only one that offers customers the extra features they want and to maintain that advantage all the time."

As indicated above, product differentiation is not only its distinctive quality. There are several types of differentiation that determine the uniqueness and peculiarity of the product.

Product differentiation - when the features and/or design of the proposed product are better than those of competitors. This type of differentiation is difficult to apply when it comes to any standardized products (essential food, petroleum 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 deliveries, installation, service. For successful service differentiation, related services must be either free, cheaper, or outperform competitors.

Personnel differentiation - when the emphasis is on personnel that perform their functions more efficiently than competitors' personnel. Typically, staff differentiation is most often used in the service industry.

Naturally, a staff that inspires confidence gives the impression of being reliable, responsible and communicative people and is competent in the area of ​​their duties is not easy to obtain. Sufficient time, money and effort must be invested in its training.

Differentiation of the image is to create a certain image of the organization or its products, which distinguishes them for the better from competitors. This strategy is also known as branding, and is achieved solely through effective advertising.

Depending on the characteristics of specific products and the capabilities of the company, one to several areas of differentiation can be implemented simultaneously.

Competent differentiation over time gives the following results:

Growth in profits even if market share remains the same.
An increase in market share, which also ensures revenue growth, even if prices are comparable to those of competitors.
A combination of market share growth and revenue growth.
The income received covers the investment costs and costs associated with the creation of a differentiation strategy.

If none of the results were achieved, it should be recognized that the differentiation strategy is 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 particular market of goods/services if the economic profit that its operations consistently generate exceeds, on average, the economic profit of competing firms operating in the same market (it is considered that several companies compete in the same market if the manufacturing, pricing, or marketing decisions of one company significantly affect the level of economic profit that other companies can earn).

Basic Competitive Strategies

There are three types of solo business strategy:

Price leadership;
- differentiation;
- focusing.

These strategies are called basic because all types of businesses or industries follow them, whether they are manufacturing, servicing, or non-profit enterprises.

Character traits basic strategies are reflected in the table:

	Price leadership	Differentiation	Focusing
Grocery differentiation	Low (mainly for the price)	high (mainly by properties)	Low to high (prices or properties)
Segmentation market	Low (mass market)	high (many market segments)	Low (one or more segments)
Distinctive competence	Production and material management	R&D, sales and marketing	All types of distinctive competence

The main advantages and dangers of basic strategies.

The advantages of the low price leadership strategy are the ability for the leader to offer a lower price than competitors at the same profit level, and in a price war, the ability to withstand competition due to 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 reduced price. The advantage of a price leader is the presence of barriers to entry, since other companies are unable to enter the industry using the prices of the leader. Thus, the price leader is relatively safe as long as it maintains a price advantage.

The goal of a differentiation strategy is to achieve competitive advantage by creating products or services that are perceived by consumers as unique. At the same time, companies can use an increased (premium) price. The advantage of a differentiation strategy is the security of a company from competitors as long as consumers maintain a stable loyalty to its products. This gives it a competitive advantage. The company naturally has no problem with strong customers either: differentiation and broad customer loyalty create entry barriers for other companies that need to do competitive development to do so. Finally, replacement products can pose a threat only if competitors are able to produce products that satisfy consumers to the same extent and are able to break the stable loyalty to a differentiated company. The main problem of such a company is maintaining uniqueness in the eyes of consumers, especially in terms of imitation and copying. The threat may also arise from changing consumer demands and tastes.

Changes in production technology make the difference between price leadership and differentiation strategies less noticeable. Firms can implement differentiation policies at low cost. Another way to reduce costs during 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 compared to the price of a pure price leader, but which will be lower than that of a pure differentiator, which can provide them with greater profits than companies using pure prices. basic strategies.

The focus strategy selects a limited group of segments. A marketing niche can be distinguished geographically, by type of consumer, or 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 a market segment where the latter does not have an advantage. If a company uses differentiation, then it benefits from the fact that differentiation is carried out in one or a few segments. In this case, the distinctive advantage in the form of quality based on competence in a narrow area is most often used.

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

Their second concern is that the niche a company operates in can suddenly disappear due to changes in technology or consumer tastes. Since there is a threat that differentiators will create similar products, and the price leader will attract buyers at a low price, 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, JSC Production Association Krasnoyarsk Harvester Plant

Competitive strategy is a tool in the hands of enterprise managers to achieve the intended goal. 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 case of certain actions of competitors. In other words, it creates conditions for the coordinated work of managers of various departments to achieve common corporate goals. And in the market, the company's actions become interconnected and purposeful.

The general idea of ​​developing 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, the development and implementation of a competitive strategy can be represented in the form of a diagram shown in Figure 1.

Picture 1. Stages of developing and implementing a competitive strategy

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

• succession and accumulation;
• the sequence of steps (stages) to be performed;
• cyclicity.

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

The sequence is caused by the dependence of the subsequent stage on the results obtained at the previous one. This will help avoid mismatch between the competitive strategy and market conditions, mistakes that have already taken place in the past, and evaluate the results obtained during the implementation of the strategy.

The cyclic nature of competitive strategic planning is manifested in the fact that the results of the implementation of a 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 is aimed at solving a number of tasks and problems that the company faces.

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

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

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

Currently, 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. The algorithm proposed below for the development and implementation of a competitive enterprise strategy (Fig. 2) can help to minimize this gap.

Figure 2. Algorithm for developing and implementing 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 tasks in competitive struggle in the market.
3. Collection and analysis of information about the external and internal environment of the enterprise.
4. Choice of competitive strategy of the enterprise in the market.
5. Analysis of the chosen strategy.
6. Implementation of the competitive strategy through the developed plan.
7. Analysis of the results of the implementation of the strategy.
8. Adjustment of the existing strategy or development of a new, more effective strategy that will be able to implement the tasks set by the overall corporate strategy of the enterprise.

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

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 the responsibility 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 submitted to the protection of the management and owners of the enterprise, who, as a whole, finally determine the priority tasks in the competitive struggle for the enterprise (stage 2). Preliminary tasks in the competition in the market are formulated in accordance with the corporate goals and directions of development of the enterprise.

At this stage, it is necessary to determine the nature of the competition (for example, offensive or defensive), who exactly needs to be squeezed out on the market, to whom (for example, competitor "A") can be forced to divert their resources from 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. At the same time, it must be remembered that only the hierarchy of strategic planning at the enterprise (general corporate strategy - competitive strategy in the market) allows you to effectively conduct 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 affect another market, and, accordingly, its participants.

In the development phase, the tasks that were formulated by the company's management are communicated 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 corporate objectives that were formulated by the management, as well as from the point of view of the enterprise's capabilities. The marketing competitive strategy, as noted above, is determined on the basis of external factors (analysis of environmental conditions) and internal factors (available resources of the company). In order to get a clear assessment of the internal capabilities of the enterprise and the situation on the market, you can use the SWOT analysis.

The use of SWOT-analysis is necessary to systematize the available information and subsequent management decisions. Therefore, SWOT analysis can be called an intermediate link between the formulation of a competitive strategy for an 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 enterprise and the market situation in order to understand whether the enterprise will be able to implement the chosen competitive strategy, and how this 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 evaluating 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 coordination is necessary to ensure 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 (in order to force them out of the market) or the absorption of some of them can significantly increase the company's market share, but at the same time exceed the antitrust laws or the costs incurred will not be able to pay off.

If the competitive strategy satisfies all the requirements, the process of developing a competitive strategy moves into the implementation phase. In this phase, the developed strategy is put into practice - marketing and sales specialists of the enterprise act in 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 competitive plan is drawn up as the last one and should begin in a finished form 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 understand 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 past period.

Actual and planned results of the previous period.

Analysis of the results of the past period. Description of the reasons for non-fulfillment or overfulfillment of the plan.

5. Setting goals and describing the chosen strategy.

The competitive strategy is determined based on the results of a study 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 the analysis of the external environment and internal capabilities of the enterprise (SWOT analysis). In addition, the selected competitive strategy must be considered for compliance with corporate goals. Here you should also characterize the chosen competitive strategy, describe the necessary conditions for the successful implementation of the competitive plan and possible reasons that could interfere with its implementation.

7. Plan for the implementation of the chosen competitive strategy.

This section should state:

BUT. Quantitative goals that define absolute sales volume 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 base indicator of the planning period is the company's market share, which is planned to be taken 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 subsequently analyzing the effectiveness of the competitive strategy after the planned period. In the activities, it is necessary to take into account such points as the need for testing, standardization, presentations, business trips of specialists for specific purposes (market research, negotiations, participation in exhibitions, provision and development of after-sales service, etc.). Each event is assigned deadlines, 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 first step in the chosen direction is taken. The main task of the competitive plan is not only to indicate the direction, but also to describe the route, the procedure for achieving the set goals - conducting research on 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 the enterprise.

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

• correctness of the chosen strategy?
• competitor reaction?
• the correctness of the planned activities and to correlate the results obtained and the planned ones?
• the effectiveness of the tasks?
• 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 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 the strategic planning of an enterprise, meanwhile it is directly integrated into it and is an integral part of it. The presented step-by-step algorithm for developing a competitive strategy and the plan for implementing the developed strategy make it possible to establish a closed cycle of competitive strategic planning.

McDonald M. Strategic planning marketing. St. Petersburg: Piter, 2000, p. 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 studying Chapter 7, the student should:

know

• 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 developing functional strategies for the enterprise;
• a mechanism for implementing 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 an enterprise should be guided by when making decisions in order to achieve and maintain long-term competitiveness.

The strategy sets a certain framework that makes it possible to identify and evaluate changes in the external and internal conditions for the development of the system and the need for its improvement due to these changes.

The strategy, as a means to achieve long-term goals, focuses on the forecast of the behavior of the external environment and, in this regard, the analysis of the possibilities for 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 goals.

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

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

By possibilities of using identify strategies typical and original.

Depending on the management level There are 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 implemented across the enterprise in selected functional areas: marketing, personnel, finance, etc.

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

Rice. 7.1.

Depending on the type of functioning, competitive strategies of commuters, patients, violents, explerents, litalents are distinguished, which reflect a specific type of biological behavior of the enterprise and have a corresponding analogy with the behavior of biological systems.

commutators, or "Gray mice"- small, flexible enterprises, easily adapting to changing market demand. Often they offer goods (services) - imitators, goods (services) - fakes, are not firmly tied to a specific field of activity, easily move from one market to another. Possess low stability in the market. Flexibility and adaptability form the basis of this competitive strategy.

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

Patients or "Cunning Foxes"- highly specialized enterprises with quantitative growth (personnel, communications, divisions) that have mastered well 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. The competitive strategy is based on narrow specialization, low costs and high quality of goods (services).

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

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

Litalenty, or "The Dying",- these are enterprises with an overly complicated, inefficient structure, a decline in financial performance. They need a quick re-profiling to a new business, new technologies, new markets, a focus on destructuring and refinancing.

Identify strategies based on company's position in the competition: offensive, defensive.

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 designed and implemented.

defensive the strategy is aimed at maintaining the competitive position of the enterprise in the already developed sales markets. The main function of the strategy is to activate the cost-benefit ratio with own benefits and benefits for buyers. Competitive struggle with such a strategy is not based on the originality of the product (service) or technology, but on their price, supply volumes and quality.

On the based 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 competitive advantages: 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 lowest possible price for competitors;
  • low costs create an entry barrier for new competitors and substitute products;
  • low costs protect the enterprise from the actions of strong suppliers, providing greater flexibility in case of price increases by them;
  • strong consumers are not able to achieve price reductions 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 cost leadership has the following risks:

• technological changes that devalue previous experience and investments;
• the ability to copy the competitive advantages of leadership in terms of costs by competing enterprises;
• inability to timely make changes to the product due to an exaggerated attention to costs.
• 2. Product differentiation is aimed at buyers who are willing 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 in terms of 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 the five competitive forces, but in a different way:

• in relation to competitors, differentiation reduces the possibility of replacing a product, increases consumer brand loyalty, reduces sensitivity to price, and thereby increases profitability;
• distinctive properties of the goods and the won loyalty of clients protect the enterprise from goods-substitutes;
• increased profitability increases resilience 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 know-how in the field of production or marketing;
• the needs of potential consumers differ;
• few competitors in the industry follow a similar path of differentiation;
• demand is price inelastic;
• the industry market has a complex structure.

Differentiation may include 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 under the influence of fakes and imitations.
• 3. Focusing- focusing efforts on any segment of the market, consumer niche, characterized by special needs, in order to better satisfy them than competitors. This strategy can be based on cost leadership or differentiation, or both, but within the target market segment.

Focusing is attractive when:

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

Focus 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 distinguish the following strategies: concentrated growth, integrated growth, diversified growth, targeted reduction.

Concentrated growth strategies. This group of strategies includes:

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

Integrated growth strategies. This group of strategies includes:

• strategy of reverse vertical integration (integration with suppliers of resources necessary for the production of services);
• forward integration strategy (integration with distributors, resellers and trade organizations).

Diversified growth strategies. Here, strategies with the following types of diversification are distinguished:

• a strategy of concentric diversification (search for additional opportunities for the production and sale of new services on the existing base of the old business; it remains at the center of the business);
• horizontal diversification strategy (production and sale of new service packages that are different from those used in the already developed sales market);
• conglomerate diversification strategy (the organization expands through the production and sale of new packages of services that are technologically unrelated to those already produced; new services are sold in new markets).

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

• a "harvest" strategy (reducing procurement and labor costs, maximizing short-term revenues from the sale of existing services);
• downsizing strategy (closing or selling divisions or businesses that do not fit well with the remaining ones);
• cost reduction strategy (development of a number of measures to reduce costs);
• business liquidation strategy.

 

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