Some companies simply do what they do better than anyone else. FedEx started with an innovative strategy. However, he continued his leadership even after dozens of other companies jumped into the transportation business from one day to the next, and they did it very well. For people, this can mean creating operating systems or new ways of analyzing data.
When you do what you do very well, you gain a competitive advantage over those who do it slower and longer. Competitive advantage refers to the ways in which a company can produce goods or provide services better than its competitors. It allows a company to achieve higher margins and generate value for the company and its shareholders. Founded in 1985, Ryanair is an Irish low-cost airline based in Dublin that follows a cost-leadership strategy to fulfill its mission to become the leading European low-cost airline (LCC).
Founded in 1854, Louis Vuitton, a French luxury goods company and fashion house, follows a differentiation strategy based on the generic strategy model, selling high-quality products, including luxury leather goods and ready-to-use accessories, at superior prices. A distinctive feature of phase III planning in diversified companies is the formal grouping of related companies into strategic business units (SBUs) or organizational entities large and homogeneous enough to exercise effective control over most of the factors affecting their businesses. As the business world becomes increasingly demanding and competitive, only a few companies that sell products or services of the highest quality, with extraordinary features or that offer something truly unique can remain in the market. Phase III planners are now looking for opportunities to “change the starting point of a company in a portfolio matrix to a more attractive sector”, either by developing new business capabilities or by redefining the market to better adapt it to the strengths of their companies.