The Model of Forming Competitive Strategy of an Enterprise under the Conditions of Oligopolic market/Imones Konkurencines Strategijos Formavimo Oligopolineje Rinkoje Modelis

By Ginevicius, Romualdas; Krivka, Algirdas et al. | Journal of Business Economics and Management, September 2010 | Go to article overview
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The Model of Forming Competitive Strategy of an Enterprise under the Conditions of Oligopolic market/Imones Konkurencines Strategijos Formavimo Oligopolineje Rinkoje Modelis


Ginevicius, Romualdas, Krivka, Algirdas, Simkunaite, Jolita, Journal of Business Economics and Management


1. Introduction

Business strategy is a response to rapidly changing, hardly forecasted environment of an enterprise; moreover, it is considered to be a proper tool to affect the environment in a favourable manner in order to achieve the performance meeting the expectations of business owners. Theoretical sources of strategic management distinguish between the two main levels of business strategy: corporate and competitive. The former is related to large, diversified companies and includes the strategic actions of operating a portfolio of business units (entering a new market, withdrawing from a market, distributing resources among business units); the latter encompasses the strategic actions of a business unit or of a non-diversified enterprise to capture the strategic position, achieve and maintain long-term competitive advantage seeking for favourable financial performance in the certain market or industry.

Competitive strategy is aimed at achieving long-term competitive advantage due to superior, compared to competitors, strategic position in the market (Porter 1979, 1998a, 1998b) or unique, valuable, non-mobile resources and capabilities (Prahalad and Hamel 1990; Peteraf 1993; Grant 1991, 1996; Barney 1991; Teece et al. 1997). Modern theoretical models of analyzing enterprise's competitive potential and forming business strategy, coupled by empirical research of that kind, are dominated by the balanced view of enterprise's environment affecting business strategy (Ginevicius 2000; Ginevicius and Podvezko 2004; Raudeliuniene 2007; Bivainis and Staskevicius 2004; Korsakiene 2004; David 2007); although, some of them rely on resource advantages or market positioning only (Casas 2000; Sekliuckiene 2006).

Scientific sources of strategic management propose a wide range of variously classified business strategies, with their application depending on objectives and strategic position of an enterprise: M. Porter's cost leadership, differentiation and focus generic strategies, I. Ansoff's growth strategies, strategies of vertical integration and diversification, offensive and defensive strategies, strategies implemented during specific stages of industry evolution (growth, maturity, decline), strategies depending on enterprise's relative position in the market (leader, challenger, follower, nicher), etc (Porter 1998a, 1998b; Ansoff 1984; Thompson et al. 2005; David 2007; Kotler and Keller 2006; Ginevicius 1998, 2009; Raudeliuniene 2007).

Generic (universal) business strategies, developed by the scholars of strategic management, together with the analyzed models of exploring enterprise strategic behaviour, proposed by the other authors, are not related to the specific market or industry structure. The choice of oligopoly as the market structure under research is motivated by its common occurrence and considerable relative scale in Lithuanian economy (Ginevicius and Krivka 2009b), complicated and ambiguous strategic conduct of oligopolic enterprises, coupled by potential inefficiency of oligopolic market structure (Ginevicius and Krivka 2008a, 2008b; Krivka and Ginevicius 2009). Strategic decisions of oligopolic enterprises might be simulated by applying game theory models: cartels and other agreements on coordination of actions, the first and the second mover advantage, competition of prices or quantities produced, entrance deterrence (Von Neumann and Morgenstern 1953; Friedman 1969, 1971, 1988; Ginevicius and Krivka 2008a; Raguseo 2009).

The scientific problem raised in the article is developing the complex model of enterprise competitive strategy under the conditions of oligopolic market, based on theoretical concepts of strategic management and modern methods of quantitative evaluation, affording ground for forming the competitive strategy that achieves goals and expected performance of an enterprise.

The aim of the research is to design and apply in practice the original, scientifically grounded model of forming the integrated competitive strategy of oligopolic enterprise, enabling to assess the strategic alternatives to be implemented and form the competitive strategy meeting the expectations of business owners.

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The Model of Forming Competitive Strategy of an Enterprise under the Conditions of Oligopolic market/Imones Konkurencines Strategijos Formavimo Oligopolineje Rinkoje Modelis
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