The relative competitive position usually expressed as the market share of a business divided by the share of its largest competitor. Thus, the relative competitive position provides a basis for comparing the relative strengths of the business in the firm’s portfolio in terms of their positions in their respective markets.
Michael Porter’s (Porter 1980) work is organizationally rooted in the SCP (Structure-Conduct-Performance) paradigm. As per this approach, 2 factors affect the competitive strategy’s choice.
- Industry attractiveness and its determining factors.
- The relative competitive position’s determinants within an industry.
Through positioning, organizations can achieve 2 basic types of competitive advantages such as low cost and differentiation. These kinds of competitive advantages are the results of the ability to keep pace with industrial factors better than competitors. Porter mentions 3 generic competitive strategies to achieve a relative competitive position in an industry.
- Cost Leadership: When the organization attempts to become the low-cost operator or producer of the industry.
- Differentiation: When the organization attempts to be unique within the industry through some dimensions that are valued by customers (better quality, more functions, and the like).
- Focus: It results in a narrow competitive scope’s choice within an industry and the strategy’s optimization for the target segment.
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