Only a small percentage of businesses truly understand strategy. Rather than that, they struggle to compete by employing the same set of methods as their opponents. Companies like SouthWest Airlines that make strategic judgments achieve more success and longevity than their competitors.
Consider the Orlando golf industry as an example; 200 courses compete for an insufficient number of golfers. The average golf course in Orlando measures approximately 6500 yards from the middle trees to the back tees. It’s rather level with no elevation, and the most of the fairways will be lined by homes. There will be plenty of water, palm trees, and pearly white sand bunkers. The clubhouse will be a single-story structure with a flat roof, and the changing room will have a mildewy odor.
Club Car or EZGO golf carts will be used and will be painted white, green, or cream. The pro store will stock a variety of shirts, a few drivers, wedges, and putters, as well as a few brands of golf balls. That is, who wants to be in the business of manufacturing durable items these days? The bar sells Budweiser and Miller light, as well as hot dogs, hamburgers, and ham sandwiches.
The majority of businesses lack a distinct competitive advantage.
The reality is that if you played a dozen clubs in Orlando and I asked you to define the distinct set of competitive advantages that set each apart, you would have a difficult time doing so. Orange County National is one that comes to mind. It features 45 holes, an excellent driving range, and minimal on-site housing. However, because it cost 50 million to build over two decades ago on dirt cheap land, they will not see a return on their investment for another century, which contradicts the point.
It Is Possible That It Could Be Worse You Might Face 2,000 Rivals
However, things could be worse; you could be in the hotel business. In the city of Orlando. Thousands of hotels compete for business at all price points, high and low, and everywhere in between. That’s not to mention the added competition posed by Airbnb B N B, condos, private rentals, and time shares, as well as the long-lasting and debilitating impacts of the Coronavirus on international travel.
Occupancy rates and room rates vary substantially, ranging from $40 or $50 for a low-end motel to $200 to $500 for the Ritz Carlton or Hyatt, depending on the season and the type of convention in town.
Making a Strategic Choice Alters the Game Instantly
Then there are places like Cypress Cove in Kissimmee or Caliente Resort in Land O Lakes, just outside of Orlando, that are completely unaffected (Coronavirus excepted) by many of the normal fluctuations in the Orlando area’s room market, because they enjoy a competitive advantage that no Disney resort can claim. They are naturist resorts, which means that everyone is naked. This is an egregious illustration of how competitive advantage works.
While the majority of the populace does not wish to go about naked, those that do have three or four options in the Orlando region, not three or four thousand. And, while I doubt the United Kingdom or the United States of America are ready for this yet, there is a naked golf course in France called La Jenny that requires participants to be naked. “Not for me!” you may object, but there is an obvious competitive advantage; if you ever feel the urge to let it all hang out when swinging, there is just one option! The purpose of these examples is to elicit thought.
These establishments have chosen a deliberate choice that severely limits their market. Simultaneously, nearly all of their competition vanishes suddenly. The hotel’s room quality, location, service, and other facilities become secondary considerations.
This is the fundamental meaning of strategy, and it is precisely what your business requires!