Strategic Moves Increase the Competitive Advantage of a Business

When implemented properly, companies can expect that the strategic moves that they make will increase the strengths of the company, resulting in a competitive advantage. The competitive advantage may be achieved in one of many ways or a combination of strategic moves may be used to create the maximum competitive advantage in a company. Some of the most common types of strategic moves to be used by today's companies include raising barriers to entry, establishing high switching costs, creating new products or services, and establishing alliances.

A company has the ability to gain a significant competitive advantage right from the start if it can deter other potential entrant from entering into the market. The fewer the entrants, the less competitive the market will be. The phrase raising barriers to entry refers to this type of strategic move where a company makes it impossible or nearly for other companies to infiltrate the market.

Many companies raise the barriers to entry so that other can not potentially take over the market. A very commonly found barrier to entry today is the copyright laws that surround various Web related avenues such as websites. The minute that a Website author creates a page a copyright is granted to the author protecting the page from reuse. Although people find web information and content to be reused all over the place, there are laws in place that govern against such reuse based on the copyright.

In situations where a copyright is not an option, a company may choose to use high switching costs to gain a competitive advantage. These tactics can sometimes seem very unfair, but to the company that uses the high switching cost as a strategic move they seem only right! High switching costs make it seem uneconomical for a customer to change companies or products.

Cell phone companies are an excellent example of a type of business that tends to use high switching costs to their competitive advantage. For years more and more cell phone companies have infiltrated the market making it easier for customers to find great service plans at even better prices. The only problem to the customer is that they often lock in a cell phone plan with a service contract agreement that forces them to stay with the company for a period of 2 years. The cell phone companies impose early termination fees for any customer who chooses to switch companies before their contracted term is fulfilled making it more costly for the customer to leave a company than it is to stick with the company.

Many companies find their competitive advantage to be in R & D of new products or services. By creating a brand new product or service that is not available anywhere else a company has immediately gained a huge competitive advantage because there is no competition! While this type of competitive advantage cannot be expected to keep a company afloat forever, the initial offering is quite good and can be maintained with additional service or product innovation.

Offering an entirely new service was the idea behind Craigslist. Craigslist is kind of like a newspaper for the entire country and other countries too. It offers classified ads like no other website on the internet and enjoys over 10 Billion page views per month. It has become not only a site for classified ads but a way of social networking as well making it the first site of its kind to ever be created. With the inception of craigslist, other smaller classified sites have had to step up their advertising just to make a valid attempt at overcoming the offerings on such a widely searched site.

While not all strategic moves will work for all companies, an excellent way to increase a company's competitive advantage is through the establishment of alliances. Services can be combined and made available from one company which not only make life easier on the customer, but the products or services can usually be offered at a far cheaper rate with such an alliance. The offering of many products in one place is often the best type of competitive advantage because it increases the potential customer base from those who may only use one product to a combination of many different customers.

Many online companies have established alliances with providers of different products or services to come together and offer packages of related items. For instance, the average traveler can go to Travelocity.com and find flights with no problem. Travelocity has teamed up with other companies to offer rental cars, hotel stays, and tickets to events in the area of choice with a fight. Most times the prices that are offered to the customer are far cheaper than if the customer were to make the purchases separately and the customer is able to save time that would have otherwise been spent searching for a deal. Travelocity benefits because they make a profit from all of the services that a customer chooses to take part in rather than just one!

No matter what strategic move a company takes, it is important to stay up to date with the latest trends in the industry in order to maximize the competitive advantage. Strategy often must be changed and new moves implemented in order to maintain a competitive advantage. Just because one strategy works for a while does not maintain that the said strategy will work forever!