Competitive Scope - Definition & Types
What is Competitive Scope?
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 can be broad scope and narrow scope.
The broad scope normally involves engaging in cost leadership and 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 Types
Competitive scope types are the following:
Segment Scope
The variety in the products or services provided and the customers served. It can target an entire segment in which all the products can be focused e.g. Colgate
Vertical Scope
This focuses on the extent to which the activities are done in-house without outsourcing or partnership with other players for service. Vertical integration is an example.
Geographic Scope
The geographic scope deals with the number of geographies served. Company can focus on 2-3 geographies like US, UK, APAC for business
Industry scope
The range of distinct but related industries in which the organization operates.
Hence, this concludes the definition of Competitive Scope along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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