Creating competitive advantage

Creating competitive advantage

Professor Kenichi Ohmae, the renowned Japanese organisational theorist and management consultant once said “What business strategy is all about; what distinguishes it from all other kinds of business planning; is, in a word, competitive advantage. Without competitors there would be no need for strategy, for the sole purpose of strategic planning is to enable the company to gain, as efficiently as possible, a sustainable edge over its competitors.”

The scramble to get customers is intense, there is so much competition in the marketplace. When you are preparing your strategic plan you need to ensure that you pay attention to identifying your capabilities which will give you competitive edge.  The world has changed so much and has developed to such an extent that it is now referred to as a global village where products produced in one part of the world are easily adopted by other countries because of the ease of communication, transportation and travel.
This is good but it has brought with it competition. It has become very difficult for local industries to compete effectively if they manufacture similar products as those produced by China, US or India, which are of a better quality and cheaper.

Survival is now for the fittest and for those who have extraordinary business acumen. Companies now need to develop robust strategies that will enable them to face competition.
However strategies on their own will not give an organisation the edge it needs to outperform the competition. An organisation needs to identify or develop certain strategic capabilities that will give it sustainable competitive advantage.

A strategic capability is a set of capacities, resources, and skills that create a long-term competitive advantage for an organisation.
An organisation that has strategic capabilities will be able to utilise these capabilities in crafting an appropriate strategy and then be able to deploy resources in pursuit of a sustainable competitive advantage.

The major levels that would create strategic capabilities are leadership and management, innovation and organisational structure. The relationship between the leaders and management will determine how an organisation will outperform the competition.  One would need to look at whether there is team work between these two functions. As businesses compete with one another for customers, market share and revenue, they employ tactics.

The process of shaping strategies and putting them into action is the responsibility of a business’ leadership. To employ each and every one of the strategies or tactics would need the involvement of management in translating what leaders are trying to achieve by developing and implementing a particular strategy. This would require teamwork.
Strategic capability looks at a business’ ability to successfully employ competitive strategies that allow it to survive and increase its value over time.
Good and skilled leadership is of utmost importance because while strategic capability does take into account the strategies a business uses, it focuses on the strategies the leaders will use in deploying the organisation’s assets, resources and current market position to compete effectively.

An organisation’s strategic capability is a major component which determines whether it remains financially viable and grows despite the presence of competitors in the market.
Many stakeholders are interested in the state of an organisation’s strategic capability and attempt to measure and track it.  Stakeholders like investors are interested in an organisation’s capabilities because they would want to put their money into businesses with reasonable chances of future success and growth.  Another group is composed of employees who are concerned that a business should develop and take care of its strategic capability since this identifies businesses that are stable and unlikely to go under or those that would be forced to cut costs through layoffs.

Business leaders track strategic capability, not only for their own companies but also for competitors to better understand the markets in which they operate. And finally, financial analysts and government regulatory agencies have interests in strategic capability since it plays a role in how they value and monitor businesses.
As you compete in the market place you need to ensure you exploit the organisation’s capabilities.

Before you face your competition you need to identify your strategic capabilities and exploit them to avoid being thrashed by the competition. Sun Tzu the greatest Chinese strategist said “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” You need to know your strengths before you fight the competition.

l Stewart Jakarasi is a business & financial strategist and a lecturer in business strategy and performance management. He provides advisory and guidance on leadership, strategy and execution, preparation of business plans and on how to build and sustain high-performing organisations.
For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: sjakarasi@gmail.com or +266 58881062 or on WhatsApp +266 62110062

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