How Companies used their Strategies for Competitive Advantage (Essay Sample)

Organizational strategy
Institutional affiliation
Name
Date
In a competitive market, firms employ various strategies to gain a competitive advantage over their competitors. The plans to accomplish such missions are known as organizational strategies. These policies are related to information systems and how a firm secure harnesses the best strategy determine the competitiveness of such a firm. The procedure consists of a well-crafted mission and vision of where the company envisions to be. These plans are crafted at the executive level and converted to measurable objectives with clear deliverables in the form of targets. There are three available strategies that a firm may decide to pursue to gain competitive advantage over its competitors.
A company may choose to engage in lower production than its rivals or also do a product differentiations in a bid to gain competitive advantage. A company may also want to target a broad market or a particular narrow market. The following paragraphs examine the three strategies a company may decide to use and also give examples of companies that are employing such strategies. The paper finalizes with an examination of competitive advantages gained by firms that use such strategies.
Cost leadership strategy requires that company's produce at lowest cost. By producing at a relatively lower cost, a company will transfer the benefits to customers through pricing therefore gain an advantage over its rivals (Dess, Lumpkin, & Eisner, 2010). A firm may use technological advancement to ensure cheap productions. Cost advantage can also be gained through economies of scale, propriety technology, and cheap raw materials. Through economies of scale and excellent technology, a firm can gain cost leadership by means of gaining market share through lowering prices while remaining profitable or by maintaining average prices while thus increasing profits. To achieve this, the company must lower its cost to the same level or below that of its competitors. The strategy works best in a market where rival products are similar or are weakly differentiated. To be able to achieve cost leadership, a firm need to have a high relative market share which requires massive capital, aggressive pricing, and workforce that is committed to low-cost strategy (Malburg, 2000).
Another strategy involves differentiation which involves the offering of a different product, a different delivery system or a different approach to marketing. The choice of factors to implement to gain competitive advantage depends on the top management. This strategy is determined by the uniqueness of products offered. It borders creativity and innovation to create a niche for this strategy. Differentiation can be through exceptionally high quality, extraordinary customer service, innovative design, and technological advantage of the excellent brand image (Dess, Lumpkin, & Eisner, 2010). Firms that employ differentiation places emphasis on branding, advertising, design and quality. They have higher service, greater flexibility and are focused in relation building. Such companies use technology to enjoy differentiation advantages.
The third strategy is the focus where a firm may focus on a narrow or a broader segment of its industry. Once a company has identified its niche or the narrowed segment, it tailors its products to cater to that particular market. When a firm achieves cost leadership or differentiation within a niche market in ways that are unique to that particular market and not available companies that are more broadly focused (Dess, Lumpkin, & Eisner, 2010). Such a firm can then be described to have used focused strategy. The three approaches are mutually exclusive and very much distinct. Companies that try to achieve all end up stuck in the middle with no particular plan. Businesses that are unable to employ either of the strategies remains in the middle and records low-profit margins as compared to those that uses one of the mentioned strategies.
Various firms have used the suggested strategies and succeeded. Companies that have implemented cost leadership are Walmart, Amazon, and southwest air. For those w...