What is Competitive Strategy? Importance, Types, Goals, Examples 

It is not easy for businesses and companies to maintain their position in the highly competitive environment in a specific industry. In order to gain some edge, they have to do something unique and raise the bars and standards. Today, we’ll discuss what is competitive strategy; its importance, types, goals, and examples. You can also call it Porter’s competitive strategy.

What is Competitive Strategy? 

A competitive strategy is the future action plan of the company that focuses on gaining a competitive edge over the competitors and rival companies in the industry. It analyzes the strengths, weaknesses, opportunities, and threats of the competitors in the industry and makes a comparison with yours.

A Harvard University professor Michael Porter was the pioneer of this competitive strategy concept. He said that businesses and companies usually implement 4 types of strategies across the world. Therefore, it is significant for businesses to be aware of such a strategy and develop their course of action accordingly.

Competition strategies play a significant role, especially when a company is competing with various other competitors in the industry for the same products. It allows you to develop your defensive industry position in the market and earn a great return relevant to the investment.

In short, we can say that the competition strategies comprise tactics, planning, and research conducted by the company to amplify its market share and beat the competition. It comprises various business functions ranging from customer service and advertisement to product development.

Business Strategy versus Competitive Strategy

The scope of business strategies is much bigger and higher than the competition strategies. A BS comprises all the strategies and action plans that the company would apply to fight the competition. However, it also comprises management techniques for dealing with strategic issues.

The focus of BS is on the action plans that the company would follow in order to gain a competitive edge in the market by employing the company’s resources.

On the other hand, the competition strategies focus on the course of action planning for offering superior quality and better value to target customers and staying ahead of the competition.

Importance of Competitive Strategy 

In order to meet the needs and wants of customers, companies should develop various strategies in terms of benefits, values, pricing, and product improvements. In fact, the reality is that the competitors would step into the competition when the specific marketing segment has the growth potential and earning profit. In such a case, the company should develop a strategy in order to stay ahead of competitors.

A company could implement various strategies to beat the competition like it can offer products at a lower price. The products that the company is offering have a high quality and value than competitors.

It is not a sustainable and effective way to develop a product or service without proper competition strategies. If you don’t, the competitors would eventually offer the same product with more features at a lower price. Well-developed competition strategies would help you to beat the competition in the market.

Types of Competitive Strategy 

Some of the four main types of competitive strategies Michael are as follows;

Cost Leadership

The focus and goal of the company are to achieve cost efficiency and become a low-cost producer in the market. They can have cost efficiency through economies of scale by producing so many products at a lower cost. Some of the main elements of achieving cost leadership are using high technology, good bargaining powers, and higher capacity utilization.

Differentiation Leadership

It is a strategic action plan that allows businesses and companies to develop and maintain unique and creative features of the product. Companies could achieve market leadership with differentiation strategies. Such brands charge higher premium prices for their product from the customers because of the better quality and higher value. Some of the top attributes of such products are promotional support, major distribution channel, quality, and superior brand.

Cost Focus

The focus of the company is on the specific segment of the customer market and the company offers them low-price products by following the cost-focus strategies. It helps businesses and companies to gain popularity and satisfy the needs and wants of customers.

Differentiation Focus

The purpose of differentiation focus strategies is to differentiate them from the competitors in the specific segment. It is a type that focuses on meeting the demands of customers and targets those customers that won’t visit the competitors because of the specific features.

Goals of Competitive Strategy 

Some of the main goals of competitive strategies are as follows;

Barrier to Imitation

It means that you have to make it difficult for competitors to copy your products. The competitors could easily copy the tangible features like buildings and machinery. But the intangible characteristics are difficult to follow like patents, technical know-how, marketing techniques, brand name, and goodwill.

Capabilities of Competitors

You should keep in mind the copying capabilities of your competitors. If the focus of the company is on establishing the product in a specific way, they won’t copy yours immediately. A unique technology of your company would sustain your position in the market.

Industry Environment

The overall environment of the industry would impact the sustainability of your competitiveness in the market. The competitive edge due to the higher innovation and creativity in the industry won’t give you the competitiveness forever.

Examples of Competitive Strategy 


BMW is the world’s leading automobile brand, and the company follows differentiation leadership strategies. The vehicles and cars of BMW offer personalized service, better features, and technological advanced, and unique design and style.


Micros max is a smartphone manufacturing company and the brand follows cost leadership strategies. The smartphone company offers all the features and tech equipment of the premium brands like Apple and Samsung, but the brand charges a lower price for its services.


Sonata is a wrist watches manufacturing brand, and the company follows the cost focus strategies. It allows the company to provide all the features of the premium brands like Omega, Titan, and Rolex, but at a lower cost.

Conclusion: What is Competitive Strategy? Importance, Types, Goals, Examples 

After an in-depth study of what is competitive strategy; its importance, types, goals, and examples; we have realized that gaining industry competitiveness requires a lot of strategizing. If you want to stay ahead of the competition, then you should follow and practice the abovementioned strategic types.

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