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Management by Competitive Edge
The approaches in management evolve and improve over time. The traditional methods of management include autocratic, paternalistic, laissez faire and democratic. Nowadays, management of a company can be accomplished in many ways. There is management by objectives, management by walking around and management by competitive edge. The latter is a new method of managing a company by having competitive advantage. The company follows the ‘high quality goods at high prices’ policy. And indeed, despite the high cost of its products, they are patronized because they are seen as the best in their industry.
It is hard to make it in any industry, let alone be number one. But it has been done. It can be evident in companies selling luxury items. That is a classic example of competitive advantage. No matter how expensive the designer bag, it will still be in demand because it is considered a superior product.
Definition of Management by Competitive Edge
When you have a serious competitive advantage over your competitors, it means you are the leader in your industry. Your company is in a better position and you have a strong competitive advantage over other companies in the same business environment.
Management by competitive edge is actually employing an effective strategy that will gain you an edge in the marketplace for long period of time. Strategic planning should be updated every so often because the future of any business is uncertain. Still the company can manage to stay ahead of the competition, both potential and present. It is by having a combination of the essential resources and proper business tactics. For example, a company can gain competitive edge by having a strong Internet presence. The company becomes number one simply by selling online, considering the number of people who can purchase their products daily. To maintain that lead, apply competitive edge management.
Resource-based Perspective
This management concept is based on the theory introduced by Michael Porter in 1985. The competitive advantage theory states that companies must create high quality goods and sell in the market at high prices using strong business policies. When a company has an attribute that can cause it to outperform its competitors, they must use to it to their maximum advantage. When this concept is applied, it follows that the company is higher in rank compared with other companies with the same product or service. They have an edge because of their resources and make the most out of it.
The company often has direct control over these resources. These resources can give the company the necessary competitive advantage. Superiority in production resources equals superior production outcome. And if you have a superior product, you can sell it at a high cost without a doubt.
How to Obtain Competitive Advantage?
A new company cannot expect to be number one at its early stages. But you can obtain competitive advantage by doing the following:
- Research about your competitors: It is very important to know everything about your enemy, so to speak. Good research should be applied so you can learn about their pricing models and procedures. You can hire an outside firm to do it or do the research yourself.
- Recruit from your competition: You can hire star employees from your competitors. You would need to pay them higher but it will be worth it when you’ll learn valuable information about your competition.
- Study customer behavior: You must know what your target market is after and incorporate it in your product. Being resistant to change can lead you to lose customers in the future. Focus groups or surveys are going to be a great help in knowing your customers.
Create a Strategic Plan
The main proponent of management by competitive edge is a sound strategic plan. Any business needs to have a sound strategic plan if it wants to have a competitive advantage over its competitors. It can be made simpler by answering three important questions: what should you do, for whom are you going to do it for, and how do you outshine the rest.
A strategic plan is created for the long-term. While the market evolution and possible transformations in the economy cannot be precisely plotted out, it is best to innovate and insert necessary changes as the years go by. A strategic plan is a good way for a company to apply competitive edge. If you are already a leader in your industry, you must maintain that status.
Steps in Strategic Planning
- Be number one. What can you do to be the best?
- State the company’s purpose. This serves as your foundation for decision-making in the future and makes it your day-to-day guide in operations.
- Envision the future. Think of where the company is headed and what you can do to achieve it.
- SWOT inventory. Take stock of your strengths, weaknesses, opportunities and threats.
- Customer profiling. Consider your target market and what you can do to meet their needs.
- List down your objectives and goals. Write down two to five achievable goals for the next few years. The targets should be quantifiable and measurable.
- Resource assessment. Think of your budget and how you can use it to achieve your goals.
Take action. Make an action plan and do it! The plan is useless unless it is acted upon.
Keys to Success Using Management by Competitive Edge
When a company is going to apply this management approach, they have to consider what will make it successful. The company will have to assign a person who is in charge of the implementation of the strategic plan.
- Executive support must be fully active. The top management must take the lead in this particular endeavor. Establishing competitive edge cannot be done by rank and file personnel alone.
- Employee involvement is important. Even if top management fully supports the program but employees are not part of the plan, it will not be successful.
- Effective communication is a major factor. It is important to impart vital information properly and to the right people at the right time.
Thorough competitive analysis and organizational planning. Having a competitive edge means you lead in the industry and you must work to keep it that way.
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- Autocratic Management
- Democratic Management
- Laissez Faire Management
- Lower Management
- Management by Coaching and Development
- Management by Competitive Edge
- Management by Consensus
- Management by Decision Models
- Management by Exception
- Management by Information Systems
- Management by Intercourse
- Management by Matrices
- Management by Objectives
- Management by Observation
- Management by Organizational Development
- Management by Performance
- Management by Styles
- Management by Walking Around
- Management by Work Simplification
- Middle Management
- Paternalistic Management
- Seagull Management
- Upper Management