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What is a Competitive Business Plan?
A competitive business plan is an all-inclusive and definite business roadmap that illustrates how a specific business firm or organization creates a strategic plan to raise one’s competitive advantage through assessing and analyzing the comparative strengths and weaknesses of competitors which may include their existing and upcoming product and service development and marketing strategies. This document is a powerful strategic planning tool for executives, assistant executives, and project managers with the aim of recognizing the past and future competitors, measuring your competitive differentiation, keeping track of your competition without getting affected, building relationship with your competitors, and winning with your heart and mind through your products and services, and your business execution.
According to a statistical report, almost half or 48% say their industry has become much more competitive in the past three years. On the other hand, large enterprises face the most competition, as well as business firms and organizations of all sizes have seen a spike in the number of competitors raise up from 25 to 29 year over year. That’s why there are businesses that are investing in Competitive Intelligence (CI) because it is a game-changing digital technology tool which is used for automation, data proliferation, and measurement, specifically in capturing and examining the movements of competitors so that businesses can take action to get ahead in their fields and industries.
Thus, all types of business executives, assistant executives, corporate strategists, business marketing specialists, project managers, and other professional leaders and strategists in a specific business firm need to effectively write a compelling and well-detailed competitive business plan. Doing this will allow them to gain continuous development of more concrete and actionable strategies in order to conduct activities which are manageable, observable, and tangible.
Different Types of Competitive Strategies
Micahel E. Porter wrote in the book Competitive Advantage: Creating and Sustaining Superior Performance that competitive strategy is the search for a favorable competitive position in an industry, the fundamental arena in which competition occurs, and it aims to establish a profitable and sustainable position against the forces that determine industry competition. Moreover, he explained that both industry attractiveness and competitive position can be shaped by a firm, and this is what makes the choice of competitive strategy both challenging and exciting. So, one of the things you need to know and understand is the different types of competitive strategies. Read the following details carefully:
1. Low Cost Provider Strategies
Do you want to lower the overall costs of your products and services that your competitors have on products or services that attract a wide spectrum of buyers? The competitive advantages of low-cost provider strategies are greater total profits and increased market share gained from underpricing competitors and larger profit margins per unit sold as the company’s costs per unit are below the unit costs of rivals when selling products at prices comparable to and competitive with rivals. Some examples of cost drivers or factors that have strong influence on a company’s costs are capturing the benefits of economies of scale, utilizing the company’s bargaining power vis-a-vis suppliers to acquire concessions, making full use of ICT system, outsourcing non-valued or costly activities, and motivating workforce through recognition and company culture. Other cost saving strategies are having low cost specification for inputs, using the most economical delivery methods, selling direct to customers, etc. There are several times when a low-cost provider strategy works best such as price competition among rival sellers is intense, and industry newcomers use introductory low prices to attract buyers and build a customer base.
2. Broad Differentiation Strategies
These types of competitive strategies are used when a business firm differentiates their product offering from rivals with attributes that appeal to a wide range of buyers. The advantages of broad differentiation strategies are commanding premium prices for the business firm’s products, increasing unit sales due to attractive differentiation, and gaining brand loyalty that entices buyers to the business firm’s products. There are some ways that managers enhance differentiation according to the uniqueness drivers which are striving to create superior product features, design, and performance, pursuing production r&d activities, pursuing continuous quality improvement, increasing the intensity of marketing and sales activities, and seeking out high-quality inputs. Businesses use these strategies by incorporating product attributes and user features that lower the buyer’s overall costs of using the firm’s product, integrating tangible features that increase customer satisfaction with the product, applying intangible features that enhance buyer satisfaction in non-economic ways, and signaling the value of the business firm’s product (eg: higher price, fancier packaging, placement, advertising) offering to buyers.
3. Focused Low-Cost and Differentiation Strategies
When a business firm or organization concentrates on a narrow price-sensitive buyer segment and outcompetes rivals on costs, they are able to position themselves in winning buyer favor through lower-priced offerings. Or perhaps a company concentrates on a narrow buyer segment and outcompetes rivals with a product offering that meets the specific tastes and requirements of niche members better than the product offerings of rivals, they can offer their products and services at a premium prices due to being the very finest items. If you use these strategies, your business can increase the sales performance as the target market niche is large enough to be profitable and provides good growth potential. Also, industry leaders don’t see that having a presence in the niche is crucial to their own success. That’s why focusers can avoid head to head competition with them.
4. Best-Cost Provider Strategies
What are best-cost provider strategies? These strategies are a hybrid of low-cost provider and differentiation strategies that focus at satisfying buyer anticipations on major quality, features, performance, service attributes and beating customer expectations on price. Businesses utilize these strategies to aim fairly at the sometimes great mass of value-conscious buyers who search for a good-to-very-good product or service at an economical price. The good thing when you use a best-cost strategy is that you can provide your customers more value for the money as you satisfy their buyer desires for enticing product attributes when it comes to features, performance, quality, service or other related characteristics.
Basic Elements of a Competitive Business Plan
In this section, you will learn how to construct an impeccably-written and comprehensive and strategic competitive business plan. However, a competitive business plan has different elements. Include the following elements for you to create a profound piece of writing:
How to Write a Competitive Business Plan
A 2014 statistical report has shown that 87% of business firms and organizations consider that Big Data analytics will change the competition factor in their niche industries in the next three years, and 89% believe that companies that will not adopt such a strategy risk losing their market position. Are you having a difficult time in writing a competitive business plan? Below are some easy-to-follow tips that indicate how to write a clear and systematic competitive business plan for your company or organization:
Step 1: Create a Concise Summary
When you create a summary, define the goals and objectives of your competitive business plan. Describe the problem your business or company is trying to solve. Explain clearly the solution that it brings along with the company’s purpose or mission, and detail the market and competition briefly. Provide financial highlights as well. Then, identify the problem your product or service solves, why your problem is worth solving, and why customers will pay for your products or services. Describe your products and service line. Explain the stage of development your product/service is at.
Step 2: Develop Market Analysis and Sales/Marketing Strategy
For your market analysis, provide information on the market segmentation, target market (size and projected growth), market trends, and customer discovery. For your sales/marketing strategy, provide details on marketing plan while describing your market strategy, specific percentage of the market you intend to capture in the next 3 years, and your method(s) in capturing the market share, as well as distributed channels location and facilities, and projected customer acquisition cost.
Step 3: Include a Competitor Analysis
List down the names of your competitors and write what you know about them already. Explore who their target customers are, as well as their pricing methods, and marketing strategy. Also, figure out their competitive advantage as well. After knowing the features, market share, pricing, marketing, differentiators, strengths, weaknesses, geography, culture and customer reviews of your competitors, you need to include the important details of your competitive analysis in your competitive business plan.
Step 4: Review and Execute the Competitive Business Plan
Review your entire competitive business plan carefully and ensure to fully include all the major points in your plan. If you notice that you overlook some sections that need sufficient points, we recommend that you edit and revise the overall document. After the revision, you can now finally execute the competitive business strategic plan for a specific period of time.
What are some examples of competitive business plans?
Some examples of competitive business plans are competition business plan checklist, competition score business plan, printable competition business plan, innovation competition student business plan, competition youth business plan, formal competition business plan, company profile competition business plan, competition education business plan, standard competition business plan, global business plan competition to promote entrepreneurship, competition student business plan, competition registration form business plan, competition eligibility statement business plan, competition marketplace business plan, competition society for biomaterials business plan, competition annual student business plan, competition university business plan, entrepreneurship through business plan competition, competition for high school students business plan, and many others.
What are the key elements in a competitive business plan that should be included?
The key elements that should be included in a competitive business plan are overview, objectives, deliverable outcomes, target audience, sample competitive business plan, competitive strategies, timeline, and budget.
What are the primary factors of competitive advantage?
The primary factors of competitive advantage are price, location, quality, selection, speed, turnaround, and service. Businesses need to consider the prices that they charge for different products or services are reasonable and favor the consumers. The consumers like to have quality products at affordable costs. They also need to ensure that their businesses are located in strategic places where they are easily accessible to many consumers or reach a wider market. Also, the quality of the products or services that they offer to their consumers should at no point be compromised, and the rate at which they produce products or provide services should meet the pace at which the products move.
What are the main competitive forces in business?
The main competitive forces in business are bargaining power of buyers, bargaining power of suppliers, threat of new entrants, threat of substitute products or services, and rivalry among existing competitors. There are powerful customers who use their clout to force prices down or demand more service at existing prices. Powerful suppliers can also use their negotiating leverage to charge higher prices or demand more favorable terms from industry competitors. The threat of new entrants can force current players to keep prices down and spend more to retain customers. The threat of a substitute is high if it offers an attractive price-performance trade-off linked to the industry’s product. If there exists an intense rivalry, it drives down prices or dissipates by increasing the competition cost.
Daniel F. Spulber wrote in the book Global Competitive Strategy: “Before globalization, your target markets were familiar, as well. With increasing globalization, keeping up with competitors means that you must expand your reach to distant countries. Getting close to your customers requires adapting to many distinct national environments.” You need to consider these aspects when you create your own competitive business plan. Therefore, writing a competitive business plan will greatly help you in the growth and development of your business as you firmly position your business in your field and industry. To guide you in your journey through a successful competitive business planning, you can learn and apply the tips aforementioned here. Plus, we have included several competitive business plan samples that you can download including global business plan competition to promote entrepreneurship templates, competition student business plan examples, competition registration form business plan templates, competition eligibility statement business plan templates, and competition marketplace business plan templates.