Strategic Planning with the Competitive Advantage Framework

Competitive Advantage is a technique that enables better strategic planning in business.

The three approaches to sustainable competitive advantage are:

• Cost leadership - Cost advantage occurs when a firm delivers the same services as its competitors but at a lower cost
  
  
• Differentiation - Differentiation advantage occurs when a firm delivers greater services for the same price of its competitors. They are collectively known as positional advantages because they denote the firm's position in its industry as a leader in either superior services or cost
  
  
• Focus - A focused approach requires the firm to concentrate on a narrow, exclusive competitive segment (market niche), hoping to achieve a local rather than industry wide competitive advantage. There are cost focus seekers, who aim to obtain a local cost advantage over competition and differentiation focuser, who are looking for a local difference.

When more than one large company strives for a cost-leadership position, the result is a price war with declining profit margins for both businesses.

Whichever strategy is chosen, the company cannot ignore the other elements. (E.g., a company competing on differentiation must still be cognizant of cost.)

Other Strategic Planning Frameworks

4P's Marketing Mix - Seven S (7S) Management Framework - AIDA - Attention, Interest, Desire, Action - Buying Process - Ansoff's Matrix - Product-Market Growth Matrix - Expansion Strategy - BCG Growth-Share Matrix - Bass Diffusion Model - Product Adoption and Innovation - Blue Ocean Strategy - Choice Model for Decision-Making Behavior - Competitive Advantage - Core Competence - Collective Learning in the Organization - Cost-Benefit Analysis - Delta Model - ERG (Existence, Relatedness, Growth) Theory of Motivation - Experience Curve - Framing Effect on Psychology and Marketing - GE (McKinsey) Matrix - Growth Phases - Predicting Industry Evolution and Change - OODA Loop - Observe, Orient, Decide, Act - PDCA (Plan, Do, Check, Act) - The Deming Cycle - PEST Analysis - Political, Economical, Social, Technological, Environmental, and Legal Factors - Perceptual Mapping - Brand Marketing - Porter's Five Forces - Product and Marketing Positioning - Product Lifecycle (Industry Lifecycle) - Root Cause Analysis - SWOT Analysis - Strengths, Weaknesses, Opportunties, Threats - Technology Adoption Curve - Value Chain -