Currently, in many industries, technologies are rapidly changing, the product life cycle is shortening, new powerful competitors are emerging, competitors are taking active competitive actions (including mergers and acquisitions to strengthen a competitive position or seize leadership), consumer requirements for goods are growing – and all this simultaneously. Due to the large amount of information, it is quite difficult to summarize and analyze it. High dynamism characterizes the industries of computer hardware and software, video games, network and wireless communications, medical equipment, medicines and others, in which the influence of electronic technologies is strong.
In a volatile market environment, a company must learn how to manage change. To do this, there are three options for the strategy [26 pp.4-5]:
Responding to changes. In response to the offer of a new product by a competitor, the company can offer its own, improved model of this product, in response to a sharp change in consumer tastes and demand – to develop a new design of its product and packaging or to shift the emphasis in advertising the product to other consumer properties. Such a reaction is a variant of a defensive strategy and does not contribute to the creation of new competitive opportunities, however, it is a necessary tool in the arsenal of competitive actions; Forecasting changes involves analyzing the situation and preparing for possible scenarios. To do this, it is necessary to study the behavior, requests and expectations of customers and develop appropriate product models and distribution channels. Like responding to market changes, forecasting is a variant of a defensive strategy, because the development of the market is determined by other companies; Managing market change means initiating a company to take competitive action to which other companies are forced to respond – thus, it is an offensive strategy option for capturing leadership in the industry. Following this strategy, the company is the first to introduce new products or services to the market, maintains technological leadership, introduces new generation models to the market before competitors and offers products and services that form consumer preferences and expectations.
In practice, the company must combine all three approaches. Leaders of dynamic markets seek to manage changes in the market situation through active actions. But even for them, the constantly changing market environment does not always allow them to fully anticipate changes, take timely preventive measures, and adequately respond to events.
The company must constantly review the strategy and foundations of its competitive advantage [26 p.4]. Too frequent (every few months or weeks) revision of defensive and offensive plans can also not be called effective, however, to follow an outdated strategy is even worse. The optimal result is given by the following strategic actions:
active investment in R&D to maintain leadership in technology and know-how; development of the organization’s ability to quickly respond to the actions of competitors and unexpected changes in the market; strategic partnership with suppliers and manufacturers of related products. New competitive initiatives every few months, rather than in response to active competitive actions of rivals; maintaining an attractive image of the company’s goods and services for differentiation against the background of similar goods and services [15 pp.263–264].
Thus, advanced technological know-how and ahead of rivals in bringing goods to market are a valuable competitive resource in highly dynamic markets, as well as organizational flexibility that provides a quick response to market changes. The advantage is also the resource base of the company, if it easily adapts to rapid changes in the external environment. In the event that the strategy chosen by the company does not give the desired results, it should be quickly adjusted. Do not be afraid of experiments, improvisations, trial and error – all this gives a unique experience and allows, in the end, to develop an optimal strategy.