What is a competitive strategy?

A competitive strategy is fundamentally a set of actions designed to attract customers and establish a competitive edge in the marketplace. This involves identifying how a company can differentiate itself from competitors or position itself effectively within the market to meet the needs and preferences of its target customers.

The essence of competitive strategy lies in understanding market dynamics and leveraging unique strengths, whether through product innovation, superior customer service, or distinguishing branding. It focuses on how a company can deliver greater value to its customers compared to competitors, ultimately leading to increased market share and profitability.

While reducing costs can be a component of a competitive strategy, it does not encompass the entire scope of what a competitive strategy is. Similarly, improving employee morale or conducting internal audits may support business operations, but they do not directly address the core purpose of a competitive strategy, which is focused on customer attraction and market position. Thus, the option that highlights attracting customers reflects the true nature of a competitive strategy in strategic management.