A company that is at a disadvantage in the marketplace because it lacks competitively valuable resources possessed by rivals should:
adopt a new competitive strategy that might better match the circumstances of the marketplace.
undertake efforts to develop a distinctive competence.
is virtually blocked from using offensive strategies and must rely on defensive strategies.
nearly always is relegated to a trailing position in the industry.
should abandon strategy elements that have caused its weakness in the marketplace.
The correct answer and explanation is :
Correct Answer: undertake efforts to develop a distinctive competence.
Explanation (300+ words):
In a competitive marketplace, the success of a company is significantly influenced by its resource base—especially resources that are valuable, rare, inimitable, and non-substitutable (often referred to as VRIN resources). If a company finds itself at a disadvantage because it lacks these competitively valuable resources, the most strategic and sustainable response is to undertake efforts to develop a distinctive competence.
Distinctive competence refers to a capability or set of skills that enables a company to perform in ways that rival firms cannot easily replicate. This could involve superior technology, unique product features, exceptional customer service, proprietary processes, or a strong brand identity. Developing such competences can help a company overcome its existing disadvantages and reposition itself more favorably within the industry.
Simply adopting a new competitive strategy without addressing the underlying resource gap may not yield sustainable results, as strategies are only as effective as the capabilities supporting them. Without strong internal resources, a new strategy may falter during execution.
Relying solely on defensive strategies might allow the company to survive in the short term but won’t enable it to seize market opportunities or gain competitive ground. Defensive strategies typically protect market share but don’t foster growth or differentiation.
The idea that a disadvantaged firm is nearly always relegated to a trailing position is a fatalistic view that ignores the dynamic nature of markets and the potential for innovation, resource development, and strategic alliances.
Lastly, while abandoning weak strategy elements might be necessary, this action alone doesn’t address the deeper issue—resource insufficiency. Without proactively building new capabilities, the company will remain uncompetitive.
In conclusion, developing a distinctive competence is the most strategic and transformative approach for a disadvantaged company to change its market position and compete effectively in the long run.