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Strategic Management : The Nature of Competitive Advantage

Updated on April 25, 2012
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Christopher F. Bueno is currently the Dean of the College of Education, University of Northern Philippines, Vigan City.

The study of strategic management is designed to provide the business, enterprise and corporation whether the public or private sector on how to get the bulk of market demand in the goods and services produce in the market. However, it is not easy to put up a profit or non-profit organization to massive market shares as there are competitors and suppliers in the product or service being promoted and the taste of the buyers.

These are the strategic variables in the nature of the competitive environment relative to competitors on the entrant players, product substitution and suppliers of raw materials of business and enterprise in the corporate world :

1. Competitors. They have the same purpose in capturing the market demand and follow the varied marketing strategies designed to replace whatever products and services provided by the other competitors. The reliance of perfect competition has to do a lot of repackaging the products and services for the customer will be satisfied of the product. The competitors and suppliers with capital-intensive enterprise have competitive advantage as the financial resources provide all the general support of the organization.

a) The Old Entrants. There are stable competitors producing products and services for the long time. The sustainability relies on the quality assurance on service and product cost. It has the tendency to follow the business cycle on signs of down turn of the enterprise.

b) The Proactive Entrants. The competitors have aggressive marketing strategies to capture the market demands on all angles. It has the organizational resources through the marketing promotion program to equally compete those who could capture the massive clients in the region.

c) The Passive Entrants. The competitors have been getting meager share of the market demand, however, it has sustained its presence as the customers are still willing to support as its price and quality of the products.

d) The New Entrants. The new competitors are considered as potential entrants willing to invest with innovative market strategies to get the market shares of the competitors in the market.

2. Substitute Products. It is the market substitutions that other competitors are aggressively endorsing the products and services with the same nature and purpose to get the massive shares of the customers in the market. It has to follow the varied entrants in the competition of goods and services in the global market. The market substitution follows the market behavior on the demand of the product and service. It follows the concepts of the change of market demand and the substitution of the products along the customers' taste, income, socio-cultural trend, commercial promotion and other market behavior variables that would fit on market substitution.

3. Suppliers of Raw Materials and Inputs. The competitors are also part of the customers and clients of the suppliers of raw materials and inputs for the production of goods and services. Likewise, it has to follow the same nature with the competitors and substitute products. The supply of raw materials and inputs have to consider quality and cost as it may affect the production vairables which are crucial in the selling the products and services in the global market.

a) The durability of the input supplies may reduce the cost of production with long term use as the depreciation will be longer, hence, the reduction of future cost just like inputs on equipment and facilities in the production of goods and services.

b) The added and reduction of the raw material costs have the effect as to the profitability and production cost in producing goods and services .

These are the complex variables in doing business and enterprise in the global market that the competitive advantage has to come up the strategic alternatives for the business and enterprise to survive by the turbulent environment that may cause by the presence of competitors, market substitution and suppliers of raw material and inputs.

These are important considerations to synthesize as to the nature of competitive advantage in the strategic management:

1. The material resources have to be environmentally friendly, presence of quality and safety, and clients benefits in the purchase of goods and services in the market. The market processing of goods and services has to insure a variety of factual information to finish the products.

2. The aggressive assertion of quality products and services in its true essence. It must need the proactive entrants to ensure the sustainability in getting more on the market demand.

3. It has to exceed the criteria of the regulatory compliance for the sake of the customers and clients which reflects good business climate and financial stability in the market. The management tool for the paradigm shift and quality assurance must always the primary strategic advocacy to ensure the confidence and loyal support of the customers and clients.

4. The stable financial and economic viability to respond the turbulent conditions in the global market. The existence of strategic management has the end goal for high level of ROI and net profit to ensure the financial viability of the business and enterprise in the global market.


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