Competitive Strategy: Analyzing and Implementing Effective Strategies for Competitive Advantage

This report explores the concept of competitive strategy and its importance in achieving sustainable growth and competitive advantage in the market. It discusses three major competitive strategies - Five Forces Model, Ansoff Matrix, and Resource-Based View - and provides practical examples and insights for implementing these strategies. The report also analyzes the current market conditions and predicts future trends to guide organizations in their strategic planning.

Competitive Strategy

In this competitive business world, every organisation aims to have sustainable growth. To attain
the organisational goals, every organisation needs to plan strategically for a longer period of
time. This long term planning for achieving a competitive advantage in any industry is known as
the competitive strategy. The competitive strategies analyse the current market condition,
predicts the future and provide a guideline what the company should do in order to have the
competitive advantages. There are many types of strategies. In this report, three major
competitive strategies have been discussed and their practical examples have been provided in
terms of the current business environment.
1

Five Forces Model
The five forces model is a strategy developed by Michael E Porter to help any company to
manage the attractiveness and the competitiveness of that company in a particular industry
(Belton, 2017). This strategy helps a business to understand the current scenario of any industry
and how to deal with that situation effectively.
Figure 1: Porter’s Five Forces Model
Source: (Dulčić et al., 2012)
Threat of New Entrants: Adidas is a large footwear company in the world also operating in the
Australian market. The threat of new entrants is comparatively low because it will require a new
firm to have a huge capital, skilled human resources along with an effective supply chain
management (Andersén, 2014). Also, Adidas has a huge brand image, skilled human resources,
unique business model, strong supply chain process, also the other brands such as Nike, Puma
etc. are also very famous in this industry. So a new firm will rarely dare to enter the market and
compete with these giants.
Threat of Substitutes: Adidas provides its customers with premium products. Nowadays Adidas
is not only a sports-focused company. It is now being considered as a fashion brand also. The
threat of substitute is moderate in this case. Because there is a little substitute for the type of
products that Adidas offers in the Australian market. Companies like Nike, Puma are the main
2

competitors who provide similar types of offerings. Though there are also some local companies
in the market along with some renowned company still it can be said that the threat is not that
much high.
Bargaining Power of the buyers: Adidas strongly believes in ensuring the best quality in their
products and maintains a strong relationship with the customers. They have a huge amount of
loyal customer in the market, as a result, the bargaining power of the supplier is low. Adidas
offers a strong differentiation in their product quality and the performance, design of those
products are satisfying the customer. Though the switching cost for the customer is very low, a
customer who is loyal to them in the Australian market won’t switch them at all.
Bargaining power of the suppliers: The bargaining power for the suppliers of Adidas is also
low. Adidas do pose a strong supply chain management process along with a wide range of
suppliers (Wirtz and Elsäßer, 2016). So if any of the suppliers do not want to supply raw material
to the company it will not affect the business. The suppliers do have a low chance of forward
integration. Besides Adidas have a multilevel monitoring system so it has huge control over its
suppliers throughout the world.
Rivalry Among the industry: The rivalry level in the footwear industry of Australia is high. For
Adidas the major competitor is Nike. Then come Puma and rest of the local and international
company. It is expected that the market size of the footwear industry in Australia will rise above
3.8 billion by the year 2025 (Dulčić et al., 2018). As a result, the market size will increase. If the
market size increases, it will bring more competition in the market. Some new companies may
enter into the industry or the existing companies can take different types of strategies to catch the
market.
3

Ansoff Matrix
The Ansoff matrix is also known as the product/market expansion grid. This matrix helps a
company to identify their opportunities through some approaches named as market penetration,
product development, market development and diversification (Huang and Wu, 2015). This grid
mainly deals with the products and markets opportunity of any company.
Figure 2: Ansoff Matrix
Source: (Hollensen, 2019)
Market penetration: The procedure of increasing the sales amount within the existing market
with the existing products is called market penetration (Hollensen, 2019). Adidas has a strong
marketing policy and a wide range of products and customers in the Australian market. Adidas
can apply this strategy by setting up new outlets in the Australian markets, increase the
advertising, provide more opportunity for the customers, modify the price etc. This will allow
Adidas to increase sales without changing the market segmentation and existing products.
Product Development: Whenever Adidas will introduce new products in the current market
segmentation it will be considered as product development. This development can be done by
adding some value or modifying the existing products also (Ananthan et al., 2014). Adidas may
offer a new shoe model, apparel design or category in order to gain more sales within the
4

existing market. The company can also provide their existing customer with the opportunity of
customizing their own products.
Market Development: Developing a new market can be done by focusing on geographic areas
for a new market with some segmentation. This segmentation can be done in many ways such as
by the gender, age group, occupation etc. (White, 2018). While searching and setting up a new
market Adidas should be aware of the psychological aspects, income, choices etc. of the
customers of that market. Also, they can also collaborate with other companies in order to make
their supply chain much stronger in a new emerging market in the countries of the Middle East,
Africa etc.
Diversification: This strategy is a combination of new products and new markets. Adidas can
follow this approach for increasing their sales also. If Adidas can introduce a new market with
some new product category they will be following the diversification strategy (Cortes, 2015).
For this, they will require more research over the new market. If they can tap the new market
with their required type of products, then Adidas will have a successful diversification.
5

Resource-Based View
A resource-based view is an approach that focuses on finding a competitive advantage by
assessing the company’s internal strategic assets. This model relies on the tangible and intangible
assets of a company and then find whether those resources are valuable, rare, easy to copy and
easily substituted or not (West and Picard, 2019). By analyzing these aspects, a company can
check their level of competitive advantage in the market.
Nike is an international company that is highly famous for its products related to the sports and
the apparel industry. It operates worldwide and the designs of their product offerings are very
creative and unique. In terms of Nike, this RBV can be also applied. Nike has tangible assets
like their factories, showrooms, capital, equipment etc. and intangible assets like brand image,
unique ideas, strategies, skills etc. (White, 2018). Nike offers its customer to make customized
shoes for themselves which is very unique and this gave them a strong point of differentiation.
This strategy has put Nike ahead from its competitors like Adidas, Puma, Rebook etc. Also, the
after-sales service of Nike is very strong. All of these has been possible because of a large skilled
human resource. All of these resources of Nike have the characteristic of immobility that’s why
the other companies can’t easily capture those resources (Andersén, 2014). The brand image of
Nike is totally different from its competitors, the physical appearance of their products, outlets
are also differentiated from others.
If Nike checks all of their resources whether those are valuable, rare, can easily be copied, easily
be substituted or not definitely the result will be in the favor of Nike. The goodwill of Nike in the
market cannot be purchased or gained by other companies easily. Also, the position they have in
the minds of the customer is also giving them a huge advantage. The tangibles assets that Nike
poses like factories, outlets can be substituted but the main resources like the supply chain
process and human resources it poses cannot be easily substituted (West and Picard, 2019). As a
result, The RBV model supports that Nike has a huge competitive advantage as they have got
very rare and valuable resources and those resources are not immobile. So other companies can’t
substitute or copy those resources easily.
6

Competitive advantage means the superiority of the products, services or position that a company
offers compared to its competitor’s circumstances. Earning a competitive advantage is not so
easy. It requires something unique or providing some extra value to the customer efficiently. In
order to have a competitive advantage, it requires a company to focus on the strengths,
opportunities, competitors’ products, market research etc. A completive strategy can assist any
company by analyzing all the factors and provide insight regarding how the company should
make its plan to gain a competitive advantage. So the impact of these strategies is beyond
description from a company view.
7

References
Ananthan, B., Appannaiah, H. and Reddy, P. (2014). Business Management. New Delhi:
Himalaya Pub. House.
Andersén, J. (2014). Resource‐based competitiveness: managerial implications of the resource‐
based view. Strategic Direction, 26(5), pp.3-5.
Belton, P. (2017). Competitive Strategy. Milton: Taylor and Francis.
Cortes, S. (2015). Customer Relationship Management: Creating Competitive Advantage
through Win-Win Relationship Strategies. Strategic Direction, 22(3).
Dulčić, Ž., Gnjidić, V. and Alfirević, N. (2018). From Five Competitive Forces to Five
Collaborative Forces: Revised View on Industry Structure-firm Interrelationship. Procedia -
Social and Behavioral Sciences, 58, pp.1077-1084.
Hollensen, S. (2019). Marketing Management. Harlow, United Kingdom: Pearson Education
Canada.
Huang, K. and Wu, L. (2015). From Temporary Competitive Advantage to Sustainable
Competitive Advantage. British Journal of Management, 26(4), pp.617-636.
West, A. and Picard, A. (2019). Shoe microclimate: An objective characterisation and subjective
evaluation. Applied Ergonomics, 78, pp.1-12.
White, C. (2018). Strategic management. Basingstoke, Hampshire: Palgrave Macmillan.
Wirtz, B. and Elsäßer, M. (2016). Social Media Marketing: Das Fallbeispiel Adidas. WiSt -
Wirtschaftswissenschaftliches Studium, 45(8), pp.453-458.
8