These four tools can help managers better do their job. In this blog, I want to briefly cover strategic group mapping, key success factors, environmental scanning, and competitive strategy.
Strategic Group Mapping
Strategic group mapping is a technique used to determine where rival firms are concerning their positions within the market. This method is very valuable in finding market needs because it shows where the competition is not about any number of variables depending on what was plotted. Strategic group maps can also be used to find out how intense competitive rivalry is between firms. The closer companies are to each other in physical locale, the stronger their competitive rivalry.
Key Success Factors
Every industry has key success factors that are the things industry members must be able to do to compete at all. If a company cannot do a key success factor, they will go out of business. Those members who can do these key success factors better than other industry members will become leaders in the industry and gain competitive advantage. There are technology, manufacturing, distribution, marketing, organizational, and skills related key success factors.
Environmental scanning is the act of monitoring the environment for social, political, economic, technological, and ecological changes. Managers try to predict future driving forces for their industry. Managers must be able to think in the long-term when evaluating these changes to determine what possible effects there could be in up to 20 years.
To do this, managers must keep up to date on current events and also keep in touch with a group of experts in each of these fields whom they can trust to give them unbiased, truthful advice.
Competitive strategies are those that focus on attracting and satisfying customers better than the competition. Competitive strategies fit into one of five categories; low-cost provider, broad differentiation, best-cost provider, a focused strategy based on lower cost, and a focused strategy based on differentiation.
Low-cost provider strategies try to attract customers from many places by having the lowest price. In a broad differentiation strategy, the company seeks to attract customers from many places because their product is different from what competitors offer. The best-cost provider strategy delivers a high-quality product to consumers at the lowest possible price for an upscale product.
A focused strategy based on lower cost is used to target a small group of customers to offer a product to at a lower price than competitors. The focused strategy based on differentiation is used to target a small group of customers to offer a product that specifically meets their needs and is different from the products offered by competitors.