First, the structure of competition is undergoing a profound change. Competitiveness is moving rapidly from a national to an international – indeed, global-scale. It is clear that, even with government purchasing, fewer segments of industry remain defensible at the national level in, for example, consumer electronics, telecommunications, transport technology and power engineering; and there is a growing list of sectors where companies are experiencing the benefits of value-added from design to sales. In some sectors, it can be in terms of designing products for many markets, thus lowering production costs earlier than is possible for purely national forms (worldwide designs can cover 80 per cent of customer needs, with 20 per cent for local adaptations).
Secondly, competitive advantage, as the basis for strategy, must rest on some clear sustainable product or market factor, controlled by the firm, which is superior to what other companies can offer or deliver. This can relate to one or more of the following:
- purchasing and supply,
- research and development,
- innovation,
- design,
- production technology,
- quality and intensity of promotion,
- product/brand performance,
- delivery and technical support services,
- financial terms.
Of course, competitive advantage can also be based on market position: on strength in a particular sector or in some defined area of product/market operations. And a change has come about in the orientation of human resource management thinking in the last decade: there is now more concern with competitors and competitive strategy, compared with, previously, exclusive concern with customers. The building of competitive position and reaction to competitive attack are now accorded a prominent place in planning and plans, where a decade ago they would have been typically eclipsed by the focus on the customer.
The reality behind this change is simple: over-concentration on customers can result in a loss of competitive advantage by which to gain and keep customers. The strategy then is, equally, to gain and to keep competitive advantage, and thereby to secure a sustainable and profitable market position. At the same time, management must be ready to make country moves to prevent other firms from eroding this position; indeed, impeding a competitor can still bring greater relative gains, even though the firm’s own performance may suffer in the short term. Lowering prices in a market where a competitor would otherwise make high profits can remove his funds from attack on some other front. The importance of some degree of international positioning is underlined by the danger of allowing a competitor to attack from a secure base.