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Definition: Competitive Scope
The competitive scope of an organization is defined as a function of the number of value chains (distinct but interrelated) in which the organization is engaged. The competitive scope is classified as broad scope and narrow scope. The broad scope normally involves engaging in cost leadership or differentiation strategy. The narrow scope involves getting into focused strategy where focus can be on cost leadership or on differentiation strategy.
The cost leadership strategy is an integrated set of actions involved in producing goods and services with features that are acceptable to the customers at the lowest cost with respect to the competitors. For example, Greyhound Lines Inc. provides bus services to its customers at the lowest cost while maintaining an acceptable level in services. The differentiation strategy normally involves an integrated set of actions in producing goods and services at an acceptable cost but with features that are perceived as better and more important to the customers. Examples of this type strategy are adopted by McKinsey and Co, Caterpillar, Ralph Lauren etc.
The focus strategy, on the other hand, involves producing goods and services that serve the needs of a particular segment of people. Focused cost leadership is adopted by IKEA, the global furniture retailer that focuses on young buyers. Focused differentiation strategy is adopted by Kazoo Toys that offers more than 60000 distinctive toys.
Competitive scope can also be in terms of the following
• Segment Scope: The variety in the products or services provided and the customers served
• Vertical Scope: This focuses on the extent to which the activities are done in-house
• Geographic Scope: The geographic scope deals with the number of geographies served
• Industry scope: The range of distinct but related industries in which the organization operates