Context in which Competitive Strategy is formulated are both external to the company as well as internal to the company.
The context in which competitive strategy is formulated
Internal factors internal to the company are company strength & weakness, and personal value of key implementers.
Factors external to the companies are industryâ€™s opportunity & threats and broader social expectation. The economic and technical components of the external environment are considered as major factors leading to new opportunities for the organization and also creating threats. Similarly, the broader expectation of the society in which the organization operates is again an important factor to determine the competitive strategy.
The external environment affects the internal environment of the firm. Competitive strategy of a firm evolves out of consideration of several factors that are external to company.
With proper analysis of competitive strategy, a company can understand its position. The company can also realize whether it is a leader or a challenger or follower in the industry.
A firm must identify its position relative to the competitors in the market.
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