Long-term business success involves creating, managing and exploiting assets and skills that competitors find difficult to match or counter. Developing this advantage is a continuing process, not a fixed event. Here are ten tips to help you develop competitive advantage and build barriers to entry.
1.
Exercise Strategic Leadership: The top management team leading your company must develop a vision for the organization; obtain employee commitment to achieving that vision; and build effective relationships with key stakeholders (e. g., partners, customers and suppliers). At the same time, management must be a catalyst for change.
A good top management team has varied expertise and knowledge. Most importantly, top managers must learn to think in a nonlinear manner, in order to develop successful strategies when faced with new – and possibly contradictory – information
2.
Leverage Core Competencies: One key to sustaining a competitive advantage is to develop a core set of competencies that customers want and that are difficult for others to imitate. These competencies can be exploited and leveraged to develop new products or to go after new markets. The ability to leverage core competencies across geographic and product business units helps firms to achieve economies of scale and scope.
3.
Know Your Marketplace: Provide employees with strong information and decision-support systems that enable them to develop strategies in response to market conditions. Your organization must have superior knowledge and understanding of your competitors, your customers and your customers’ perceptions of your products and/or services. Defining and measuring criteria, and then interpreting and communicating results, is crucial to the process.
4.
Develop Customer Loyalty: Every business seeks satisfied customers who return again and again because they trust a company’s product or service. Their repeat
business comes at a much lower cost to you than that of a customer who must be constantly enticed to continue buying.
In addition to working on core product and service attributes to build customer loyalty (such as treating each customer as a valued individual), businesses must work on such issues as instilling a helpful staff attitude, delivering on advertising promises, developing a favorable return policy and providing accurate product information.
5.
Innovate Strategically: Whether you are a first or late mover, innovation creates sustainable advantage. The pioneering company plays a central role in defining both the concept and buyer preferences for a category. But if the originator doesn’t understand the market, a late mover can identify a superior but overlooked product position and undercut the pioneer. The key is innovation based on the market’s needs.
6.
Engage in Growth Strategies: Identify opportunities such as geographic expansion or new target markets that will enable your company to grow. Enter those markets using the most effective method (e. g., strategic alliance, outsourcing, direct). Where risks are high and/or adequate internal resources are unavailable, search for a partner who can join in developing a cooperative venture. Select partners with complementary resources and appropriate strategic intent.
7.
Attract and Retain Human Capital: Companies must start by investing appropriately to recruit and select top-quality employees.
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