How to Compare a Business Model With a Competitive Strategy
A business model is the method a business uses to generate revenue through the sale of its products or services. A competitive strategy focuses on how a business will systematically compete and (hopefully) gain an advantage in the market. At times, the two terms can overlap as selecting the right business model could provide a strategic competitive advantage. Comparing a business model with a competitive strategy requires more in-depth observation.
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Instructions
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1
Compose a 2 to 3 sentence statement describing how your company establishes value in its product or service and how it is delivered to the consumer. This statement will define the business model. For example, does your company operate sell products auction style, network sales, or a franchise? Does your company "cut out the middle-man," operate solely online, or seek to dominate a local market with a neighborhood loyalty business model? These are a few examples of the many different types of business models. Each business model depicts how the company will create value for the customer and deliver that value for a price.
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2
List the ways your company differentiates itself from competitors. You will need to compare the ways your company does business better than its next 3 competitors. This could be a list of 1 major aspect or dozens of different ways, both large and small, that make your business more successful in the marketplace. Examples include superior customer service, faster delivery, higher quality, lower prices, more convenient locations, e-commerce options, or lower overhead. These items are the areas that support your company's competitive strategy.
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3
Identify how your company supports each of these aspects listed in step 2. For example, does your company stay competitive by consistently investing in the latest technology to improve business efficiencies to reduce operational waste and improve customer service and product delivery? This is a competitive strategy derived from the intent to provide the most efficient service at the greatest cost effectiveness.
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4
Compare the results of your analysis in step 3 to your business model description composed in step 1.
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Tips & Warnings
Don't be surprised if there are a few elements that are found in both the competitive strategy and the business model. Understand that those elements that are found in both your business model and your competitive strategy are where the two plans overlap; these aspects are shared by both.
You can also analyze the competitive strategy of your competitors to identify areas that make them better in the market. Once you have identified these areas, you can refine your competitive strategy; developing these areas within your own company to reduce your competitions market advantage.
