Lesson 23: Strategy, Competition, and

Analysis
The world of business is competitive, and companies need to have solid
strategies in order to achieve their objectives. The other companies in a
similar area of business are called competitors, and a competitor that is
especially challenging can be called a rival.

The company with the highest percentage of customers in an area is called the
market leader because it is “ahead” of all the other competitors. Sometimes
the market leader dominates, corners, or monopolizes the market – this
means it has an extremely large market share (percentage of customers in
that market). For example, if 90% of cell phone owners have an iPhone, then
Apple is dominating the cell phone market.

For a business to outperform its competitors (achieve more than its

competitors), it need to have a competitive advantage – that’s a reason for a
customer to buy from that specific business and not another one.

Some companies try to differentiate (make it clear that their products and
services are different) based on price. They might be able to
streamline/optimize operations – make the operations as efficient as
possible – in order to offer the lowest price on the market for that product.

Another way to reduce the cost of production is for the company to use its
bargaining power (ability to influence someone else to achieve a desired
outcome) to negotiate lower prices from its suppliers. Prices also fall if a
company can cut out the middleman (eliminate intermediaries from the
supply chain) – for example, a factory selling directly to customers instead of
selling to stores which then sell to customers.

Other businesses focus their strategy on developing state-of-the-art

products, meaning products that are the most advanced in their category.
These companies might invest heavily in innovation, bringing new ideas to

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market as quickly as possible. Their products won’t be the cheapest, but the
unique features provide a compelling (powerful, able to convince someone)
reason to buy.

Another business strategy is to make relationships with customers a priority.

Companies using this strategy will try to cultivate customer loyalty
(encourage the customers to buy only from them) and create advocates –
customers who will tell others about the products/services.

How can a business create and implement a strategy? This can be done by the
leaders of the company, with the help of analysts or consultants who
specialize in this area.

The first step in analyzing a business is often to understand the current status
of the company and the vision it is hoping to achieve, meaning its long-term
goal for its impact in the world. It’s important to consider all the different
stakeholders – those are people who have an interest and are affected by the
business (customers, employees, suppliers, investors, etc.).

Next, the company must determine the objective for the project and decide
what the deliverables will be – deliverables are the items that must be
completed in order for the strategic project to be considered a success. The
business might make sales forecasts (predictions of sales) or base its goals
on benchmarks (statistics that are considered the standard).

Then, the company must come up with a viable plan to reach those goals,
meaning a plan that is able to be achieved successfully (not something
impossible). Some of the possible actions that might need to be taken include:

• Redesigning or re-engineering (changing the structure of) their

processes
• Adjusting their positioning (how the brand and its products are viewed
as distinct from others)
• Looking for new distribution channels – ways of supplying and
delivering the product.

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 • A more radical plan would involve changing the business model –
that’s the way the company creates value and makes money.

To discover if the plan is having the desired effect, the company can monitor
KPIs – key performance indicators. These are statistics that show how well
each part of the company is doing. They will vary from area to area; for
example, a KPI for the sales department might be number of new customers, a
KPI for a factory might be getting the number of defects below 1%, and a KPI
for the IT department might involve increasing the speed of the computer
systems.

Read more about different business analysis techniques:

• https://en.wikipedia.org/wiki/Business_analysis#Business_analysis_tec
hniques
• http://www.bridging-the-gap.com/business-analysis-process/

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Quiz: Lesson 23

1) It looks like one of our ____________ has copied our product design!

A. competitors
B. market leaders
C. monopolizes

2) One company has essentially ____________ the market on eyeglasses by

acquiring all the other companies in the industry.

A. cornered
B. outperformed
C. rivaled

3) The software business failed because it didn't have much of a competitive

______________; it was pretty much the same as the other products on the
market.

A. advantage
B. dominate
C. share

4) When we ___________ our manufacturing process and eliminated unnecessary

steps, we cut costs by 20%.

A. bargained
B. differentiated
C. streamlined

5) Our "smart home" products use ____________ technology to customize your

user experience.

A. compelling
B. middleman

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 C. state-of-the-art

6) Their company's strong point is its customer ____________ - once people sign
up, they tend not to switch.

A. analyst
B. innovation
C. loyalty

7) We decided to abandon some initiatives that weren't contributing to our

company's overall ___________.

A. sight
B. view
C. vision

8) There are a lot of ______________ for this project, but I think our team is up for
the challenge.

A. consultants
B. deliverables
C. stakeholders

9) 50% of our students are leaving every semester - that's well above the
_____________ in the education industry.

A. benchmark
B. distribution
C. positioning

10) One of the key performance ______________ for our customer service
department is how fast we reply to each contact.

A. channels
B. indicators
C. models

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Quiz Answers: Lesson 23

1.A, 2.A, 3.A, 4.C, 5.C, 6.C, 7.C, 8.B, 9.A, 10.B

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