A successful service strategy allows people create various companies and provide them with a progressive growth. Service strategies point out where it is necessary to concentrate resources in order to achieve the desirable results and make a profit of investments. One of the challenges, which any company may face, is a professional growth year by year.
Any kind of progression requires concrete and considered plan that take into consideration both consumers’ and sellers’ needs. There are three competitive service strategies, which will be analyzed in this paper: cost leadership, focus, and differentiation. According to the work of Michael Porter about the Competitive Advantage model, a competitive strategy may take both offensive and defensive actions in order to take a certain position in any industry. (Porter, 1998)
The purposes of each competitive service strategy are rather different, and all of them have certain advantages and disadvantages.
In order to achieve cost leadership, an organization needs to become a low cost producer in the whole field of industry. It is necessary to seek for low cost customers, promote self-service, reduce all network costs, and take more service operations online. Usually, when several companies want to achieve cost leadership, it appears to be a disaster. (Booth, 1993)
When companies are aimed at achieving differentiation, they try to find out unique services, which will be certainly appreciated by buyers. For such goals, it is better to reduce perceived risk, control the quality of products, and pay special attention to personnel training. The point is that differentiation is closely connected to the cost position of the company. The areas for differentiation may be either products or sales, or services, or distribution. (Porter, 1980)
As for the last competitive strategic service, focus, it requires from a company to set out in order to be the best in one concrete segment: either cost focus or differentiation focus. If focus is successful, a company starts to neglect it soon or late. In order not to loose the achieved results, it is necessary to focus on something else but not to compromise the chosen focus strategy.
In 2007, Microsoft Corp. employed one of the competitive service strategies – cost leadership. It was a strategy for different online services. The company offered a new road map for offerings. Such innovation helped to synthesize software for clients and servers. It can be used either by ordinary computer users at home or by business companies. Online services provide a kind of new generation with rich experiences – to be available all the time.
With the help of online services, people get much more freedom and choice when, where, and how interact with other people and information. There are two innovative services: “Live” and “Online”. “Live” offerings are concentrated on communication, productivity, and, of course, entertainment. “Live” is ease at use for everyone: business-users, individuals, and group of people. “Online” is concentrated on concrete needs in the IT sphere.
Here, the role of power and flexibility is really great. Such services help to control the access to data and manage all users. Benefits of such service strategy are visible: more users, who can allow get all the necessary information online, less costs for phone communication, and 24/7 connection and support.
Any of these competitive service strategies, cost leadership, differentiation, or focus, plays a significant role in company’s development. In order to employ any of them, it is necessary to evaluate general position of a company in industry, analyze company’s possibilities, and create a plan of implementation the chosen service strategy.
Reference List
Booth, S. A. S. (1993) Crisis Management Strategy: Competition and Change in Modern Enterprises. Routledge.
Porter, M.E. (1998). On Competition. Harvard: Business Press.
Porter, M.E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Michigan: Free Press.