Business Strategies for Competitive Dynamics

Introduction

The most successful companies design innovative approaches that make them different from their competitors. Business models indicate their opportunities and operating implications. Different competitive models are used for strategic management in order to implement short- and long-term goals. The main goal of this paper is to discuss models for competitive dynamics, paying particular attention to the Destroy Your Business (DYB), Grow Your Business (GYB), market cannibalization, and Information Systems (IS) strategies, and the use of Social IT.

DYB and GYB Strategies

There are two opposite strategies aimed at sustaining a business in the marketplace in the long run and improving its competitiveness and profitability. The DYB concept focuses on constructive destruction that eventually leads to stronger growth (Williams, 2015). However, for many businessmen, it sounds too risky. Most companies try to maintain constant development, though sometimes it is necessary to get rid of certain products, processes, and even markets. Such tactics allow a business to go beyond its limits and result in more intense growth in the long run. Disruptive innovations are aimed at destroying ineffective practices in order to replace them with new more efficient processes. Therefore, the DYB strategy can improve the overall performance, making a business more competitive.

However, there is another approach to enhance the company’s production output and flexibility that subsequently result in higher profits. The GYB strategy is an opposite concept, which also has many advantages. For majority firms, growth serves as an indicator of success. It offers new opportunities, leads to market expansion, and, consequently, increases profits. Although there are various risks that accompany business growth, the upsides of this strategy outweigh its drawbacks in most cases. One of the GYB’s main competitive advantages is that it allows capitalizing on the economies of scale. The increase in a company’s capacity can reduce costs per unit. Consequently, it multiplies savings across purchasing, marketing, and overhead expenses. In addition, the GYB strategy generates more sales, impacts market price, and brings down external risks. Therefore, this is an important concept that might improve competitiveness and profitability of a company in the long term.

Market Cannibalization

The cannibalization strategy is another concept that might ensure business growth. Generally speaking, market cannibalization means dropping market share of a certain product to introduce a new one (Marionneau & Nikkinen, 2017). When a company has an opportunity to come up with new products or undertake new methods to meet customers’ needs, it might apply market cannibalization strategy. However, other market players discover similar opportunities and also introduce new products. Therefore, it turns into an eternal race that leads to the development of more innovative solutions. When a company discovers a more efficient channel of delivery, it has the advantage over other competitors that use traditional channels.

Change is constant, thus businesses should always be engaged in market research. Therefore, this strategy is similar to the DYB concept. However, the main difference is that market cannibalization is caused by external factors. Meanwhile, the DYB strategy is mostly a deliberate initiative of a company only to create a room for the further development. Hence, in most cases, market cannibalization is a more effective strategy because it motivates businesses not only to keep up with the pace of progress but also to raise the bar even higher. There are several examples of the application of this strategy by famous companies. Hulu LLC shot down network airline and started broadcasting television programs online. Another example of market cannibalization is the introduction of more feature-rich iPhones, which reduces sales of previous versions of this product.

Reassessment of IS

Information systems evaluation practices are necessary in the field of systems development. Such systems serve to collect, filter, create and distribute data. IS assessment is one of the most important parts of their life cycle. Determining their effectiveness is critical for the analysis of set-up objectives and the obtained results. Nowadays, companies need to constantly monitor the costs and benefits of investments in computer systems (Peppard & Ward, 2016). Therefore, any change in business strategies requires the reassessment of IS. There are several reasons for it. First, it is necessary to ensure that IS make a new business strategy complete. Such systems are crucial to improve the competitiveness of a firm as they are designed to meet the existing wants and needs of customers. Second, as changes in strategies might negatively affect the overall performance in the long term, it is also necessary to reassess the IS. The application of new technologies is very important to maintain the competitiveness of a business. For example, if a company utilizes social information technologies, it should align these systems with organizational and IS strategies. Finally, reassessment might enhance collaboration and engagement among employees as it improves the effectiveness of collaboration instruments. The reassessed IS allow specialists to engage with each other more easily.

Use of Social IT

Social IT is a very important tool that might be used in alignment with organizational and IS strategies. Social networks are the most prominent part of any marketing strategy as it offers the tremendous number of opportunities. IS and organizational strategies should pay particular attention to the use of social IT as it is a key element for successful marketing and business expansion. First, social media might be used to increase brand awareness. This is a positive factor for any organizational short- and long-term strategy. Social media helps to improve brand recognition as it engages a wider audience of customers. Aligning social IT with IS strategies can boost interaction with business partners and clients. Interaction with consumers makes them more loyal.

Therefore, it might also be used to build a positive reputation for a firm and to make inbound traffic unlimited. In order to implement this goal, it is necessary to apply search engine optimization. Ranking in the top positions for specific keywords drastically changes traffic and, subsequently, leads to favorable outcomes. Therefore, it might be very useful to collaborate with various advertisers, bloggers, and other active online figures. Such collaboration allows building a social media community in which company’s supporters share its content. Each comment, post, or video on the Internet can serve as an advertisement for company’s products. In addition, marketing via social networks is one of the most cost-effective approaches to promote company’s products. Hence, tactics that involve the use of social IT can be aligned with organizational and IS strategies and can be used by many businesses as they eventually improve the profitability and competitiveness.

Conclusion

There are various models for competitive dynamics that might be applied, depending on circumstances. Some of the most effective are the DYB, GYB, market cannibalization, and IS strategies. Also, they might be complemented by the use of social IT, which helps to expand company’s markets and increase company’s profits. Although methods involved social media should be applied in alliance with existing organizational and IS strategies, there are different time-proven approaches that can guarantee favorable outcomes.

References

Marionneau, V., & Nikkinen, J. (2017). Market cannibalization within and between gambling industries: A systematic review. Journal of Gambling Issues, 37, 1-35

Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a digital strategy (4th ed.). Hoboken, NJ: John Wiley & Sons Ltd.

Williams, L. (2015). Disrupt: Think the unthinkable to spark transformation in your business (2nd ed.). Old Tappan, NJ: Pearson Education.