STRENGTHENING A COMPANY'S COMPETITIVE POSITION: STRATEGIC MOVES, TIMING, AND SCOPE OF OPERATIONS

Alhamdulillah, this is the sixth lecture for Strategic Management subject. This week Miss Ummi taught us about how to strengthening a company's competitive position. This chapter discussed about which strategy that good time to implement and also what scope that best to use. To maximizing the power of particular strategy, there are three choices that complement a competitive approach which is:

1. Offensive and defensive competitive actions
2. Competitive dynamics an the timing of strategic moves
3. Scope of operations along the industry's value chain

 Offensive competitive strategy is one of the corporate strategy consisting of attempting to pursue changes within its industry. The companies involved in offensive competitive strategies typically invest in technology and research & development R&D in hopes of staying head of their competition. Companies also use this type of strategy when acquire other companies. Strategic offensive principals focus on building a competitive advantage and later convert the advantage to form a sustainable advantage. Sometimes a company's best strategic is to seize the initiative, go on the attack, and launch a strategic offensive to improve its market position.

Before start the offensive competitive action, the company need to make sure that at the time of attack, the competitor is in their weak state. The company also need to attack the competitor weakness not their strength, because if they attack the strength, then it is a waste action, it will not effect anything.

There are several options to act in offensive strategy which is:

• offer a good or better product at a lower cost to attack competitor
• make use the research and development to make a new innovation on the company product
• observe others firm improvement and adopt or adapt the good improvement

A blue-ocean strategy also an offensive competitive action that offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand. A term coined from the 2005 book, The Blue Ocean Strategy, by W. Chan Kim and Renee Mauborgne that describes the opportunities of vast untapped market spaces, or "Blue Oceans", that can be developed by expanding market boundaries or launching new industries.

Defensive competitive action define as a management approach designed to reduce the risk of loss. For example, even a relative aggressive business might employ a defensive strategy when it comes to investing its extra liquid funds in certificates of deposit or relatively stable bonds and stocks. The purpose of defensive competitive action is:

• lower the firm's risk of being attacked
• weaken the impact of an attack that does occur
• influence challengers to aim their efforts at other rivals

Horizontal scope define as growth of a company based on expanding existing methods of business including expansion into other locations, addition of more stores, building more outlets for distributions, or enlarging a territory geographically. On the other hand, vertical scope means a merge of companies at different stage of production and/or distribution in the same industry. When a company acquires its input supplier it is called backward integration. When it acquires companies in its distribution chain it is called forward integration. Fro example, a vertically integrated oil company may end up owning oilfields, refineries, tankers, trucks, and gas (petrol) filling stations. Also called vertical merger.