Its important for companies to maintain competitive advantage over their competitors. In order to do so they need to have a “unique value proposition” that would help them establish their brand equity. Also, they need to be serving in a field that is not too crowded and/ or “general” example: airlines industry, cinema halls, sugar manufacturing etc.

Let me elaborate this a little bit: The airline industry offers the same service (transporting stuff and people), it is crowded (too many players) and thus even though the industry has made itself more and more efficient over the years it hasn’t been able to really capitalize on that due to heavy competition and lack of ‘unique value proposition’. some airlines have tried to establish that by offering higher quality customer service Example: Virgin Atlantic, Southwest airlines etc but that hasn’t helped the airline industry as a whole.

Critical Strategic Decisions:

1: Be in an attractive industry: Dont be in a business that is overly crowded, however if you already are in such a business then figure out a way that will distinguish you from your competitors. Maybe a better customer service model, maybe higher efficiency (driving lower cost) etc. Look into all the forces you’d be dealing with: from Buyers, Suppliers, Competition, Substitutes and Barriers to Entry.

2. Coherence is the key: Have a coherent strategy and dont blindly accept anything with positive Net Present Value (NPV). Strategy has a lot to do with what you don’t want to do. One critical way of ensuring this is to know which project to reject. It maybe that the project has a great NPV but the executives need to understand if those are sustainable or not, would that project/ projects fit in the overall mission and vision of the company and if it will change the perception (Branding) about the company with its current customer base. In essence you have to ask yourself.. how does this proposal fit with what we are trying to achieve.

3. Establish a unique value proposition: that will give you sustainable advantage over your competitors. Sustainable advantage has to be something that is difficult to replicate. Lion has a sustainable advantage (sharp teeth+strong jaw+powerful athletic etc) other animals in the jungle, therefore its called the king of the jungle. Make sure that your advantage is sustainable. dont be fooled to think that the fact that you have a greater bargaining power as compared to your competitors that you will enjoy that position for ever.. that is not sustainable advantage. however, if your manufacturing practices so efficient and unique that you have a greater cost advantage then that is somewhat sustainable. If you have some patented technology that makes you more efficient or productive etc then THAT surely is sustainable competitive advance.

4. Know your customer: Understand your customer’s unique needs, and their overall profile (including their buying potential). Understand what they value in your services and capitalize on that… instead of mimicking your competitor’s moves.

5. Justify higher prices with better value proposition: Find a way to justify higher prices for your products and services. maybe through more innovative designs, higher quality, convenience, financing options, after sales support/ service etc etc.

6. Make it difficult for your competition to mimic you/ copy you/ replicate you: This can be achieved if you

a. Build a system that is highly integrated (example: iTunes).. Rome was not built in a day.

b. Build a loyal customer base. sooner the better.

c. Cost advantage: Highly efficient processes, economies of scale

d. Product innovations protected by IP law.

7. Get rid of extra baggage: If you have too many products and too many lines of business it would mean that you have spread yourself out too far and too thin. This is a perfect recipient for failure since it will confuse your customers, and also your employees (including you). Its better to focus on your bread and butter and capitalize on that, this will ensure you stay in business. This doesn’t mean that you loose focus on future.. that is also important.. but you have to alive to run the race and your bread and butter is what you need for that.

8. Know when to call it quits, re-invent yourself: There is a popular saying, “change is the only constant” which holds true in business too. You have to know where the industry is heading and when is the time to exit it to catch the next wave. You have to plan your next moves at-least 10 years in advance and start planning accordingly. having a solid exit strategy will ensure that you maintain sustained competitive advantages.