Business strategy focused on competitive advantage deals with key decisions regarding production, pricing, output, and market structure. These decisions are influenced by a firm's specific conditions as well as the overall competitiveness of the industry.
The question pertains to creating a business strategy that aims to establish a competitive advantage within a particular product-market. This strategic approach requires companies to decide on critical questions, such as which products to produce, the production process, the volume of output, product pricing, and the amount of labor to employ. These decisions rely on each firm's production and cost conditions and the broader market structure that characterizes how competitive the industry is. The structure of the market influences various critical factors, such as the extent of market power held by each firm, product similarities, and barriers to entry for new firms, all of which are crucial for businesses operating in various types of market environments, including perfect competition, monopoly, monopolistic competition, and oligopoly.