Every company and each firm has competition. The competition may be direct or indirect, but there’s competition. The health spa competes with the tv, McDonald’s competes with cooking reception, and the design company competes with the do-it-yourselfer. The moment a firm begins to believe that it doesn’t have competition is that the exact moment it becomes liable to competition.
Competitive Advantage and also the Basis for Competing
Once the firm knows who the competitors are and what they are doing, it needs to carefully identify and document who it’s. this is often called creating a competitive advantage. A competitive advantage is creating through differentiation and differentiation is made through branding and imaging.
Any time a customer asks for your product by name, you have achieved differentiation. Although theoretically simple, creating differentiation through brand and image isn’t as simple because it sounds.
It is a process of identifying the firm’s strengths, weaknesses, limitations, hurdles, and faulty assumptions, followed by creating a brand that is identified by logos, tag lines, colour scheme, and every one those additional elements that make a visible or recognizable memory of the firm. The competitive advantage of a product or service also depends heavily on variables like the amount of sophistication of the product, prior experience thereupon product or service during a certain country or a part of a rustic, and therefore the varieties of distribution channels available.
Costs and Risks
Creating competitive advantage may require a high level of cost and risk to the firm. Often, a firm will create a branding strategy that “pushes the envelope” and increases risk both in time and in money.
However, the brand image that’s created is so strong that the customer immediately responds positively. it’s imperative that the brand or image created be aligned with the firm’s strategic initiatives and goals.
Creating a Perceived Value
There are two packages of cheese, both of which are produced at the same factory. One is sold at the supermarket for $3.50 and carries a brand name. the opposite package of cheese may be a generic brand and sells for $2.50 before the shop gives a “VIP card” (frequent shopper) discount.
It is the precise same cheese with different labels. However, millions of Americans buy Kraft over the shop brand because it’s a brand they can trust. this can be what’s said as “perceived value.” The customer has no concept the cheese comes from the identical plant, has the same ingredients, and is maybe even packaged at the identical location.
It is even possible that the identical truck delivered both cheeses to the grocery store. the worth isn’t within the cheese, but within the trust that the customer places in a very company with which he/she can identify.
The SWOT Analysis: Identifying Firm SWOT
Once the competition and therefore the industry are assessed, a firm may wish to perform a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities, and threats. The strengths and weaknesses are internal factors, whereas opportunities and threats are external factors.
A SWOT analysis is as high-level or detailed as necessary to know and bring to light the challenges and next steps for the firm in creating strategic initiatives.
To fully understand the firm’s competitors and therefore the competitive environment, it’s imperative that the firm compare its SWOT to its competition’s SWOT. Most business leaders will want to confirm that a SWOT analysis is performed on the firm at regular intervals which input on the SWOT is gathered from many areas of the organization, as well as from the customer.