Competitive Strategies: Defensive, Offensive, and Growth Tactics

Posted on Feb 12, 2025 in Business Administration and Management (BAM)

Competitive Strategies for Business Growth

Defensive Strategies: Reducing Competitive Risk

Defensive strategies aim to reduce the risk of attacks from competitors, strengthening and preserving a company’s competitive advantage.

Ways to Protect Competitive Advantage:

  1. Impeding Attackers’ Actions:
    • Expanding the product line and filling market gaps.
    • Securing exclusive agreements with suppliers or offering reduced prices to distributors.
    • Maintaining products similar to the competition.
  2. Counteroffensives Against Competitor Attacks: Deterring competitors by signaling potential responses to their actions, such as advertising campaigns, new product launches, technological innovations, or image enhancements.

Offensive Strategies: Gaining Competitive Advantage

The goal of an offensive strategy is to aggressively target rivals to gain market share.

Types of Offensive Strategies:

  1. Attacking Competitor Strengths: Launching a product as good as or better than the competition, with a lower price or additional services, to neutralize their competitive advantage.
  2. Attacking Competitor Weaknesses:
    • Targeting geographical areas where the opponent is weakest.
    • Focusing on weak segments of the competition.
    • Launching targeted image campaigns.

Quick Response Strategies: Leveraging Time as a Competitive Advantage

Quick response strategies involve acting faster than competitors by introducing new products or accelerating decision-making processes.

Forms of Quick Response:

  • Developing new products quickly, reducing time to market, and improving existing products.
  • Customizing products to meet specific needs or ensuring immediate delivery.
  • Responding rapidly to customer demands and reinforcing these advantages.

Disadvantages:

Quick response strategies are not suitable for all companies, especially those lacking the necessary technology, systems, or preparation. Time may not be as critical in all markets or for all customers, and the need for rapid decisions can lead to stress among staff.

External Growth Strategies

External growth results from acquisitions, partnerships, associations, or control of other companies or business units already in operation.

Consequences:

  1. The company gains size and productive capacity by adding the assets of the acquired company.
  2. The company can expand its businesses or enter new markets.

External growth involves acquiring existing production capacities, representing a change of ownership of productive assets rather than an increase in real investment from a macroeconomic perspective. This distinguishes it from internal growth, which benefits both the company and the economic system.

Types of External Growth:

  1. Integration of Companies or Mergers: Combining two or more companies, resulting in the disappearance of at least one original entity.
  2. Purchase or Participation in New Businesses: Buying and selling shareholdings between companies while preserving the legal personality of each.
  3. Cooperation and Partnerships Between Companies: Establishing links and relationships through legal formulas, express agreements, or tacit understandings, without loss of legal status for any participant.

Expansion Strategies

Expansion strategies focus on developing products and markets within the company’s traditional scope.

  • Expansion is based on the growth or operation of the current business, maintaining a close relationship with the company’s existing situation.
  • It utilizes the same technical, financial, and trade resources used for the initial product line.