Competitor based strategies can be constructed by looking at possible sources of differentiation in functions such as: purchasing, design, engineering, sales and servicing.
The following aspects show ways in order to achieve this differentiation: A favorite phrase of Japanese business planners is hito-kane-mono, standing for people, money and things (or assets).
[1] This combination reflects the belief of some Japanese business planners that streamlined corporate management is achieved when these three critical resources are in balance without surplus or waste.
The corporation should firstly allocate management talent, based on the available mono (things): plant, machinery, technology, process know-how and functional strength.
In case of rapidly rising wage costs, it becomes a critical decision for a company to subcontract a major share of its assembly operations.
If its competitors are unable to shift production so rapidly to subcontractors and vendors, the resulting difference in cost structure and/or in the company's ability to cope with demand fluctuations may have significant strategic implications.
In essence, the company should seek to stay ahead of competition by either outsourcing some of its activities which are quite costly but do not have direct value addition or it should apply backward integration techniques for its core business areas.