Final answer:
A company's strategy is more effective when it matches competitive conditions, focusing on core competencies and specialization. This allows for efficiencies and competitive advantages such as cost savings and quality improvements. Innovation is also key for maintaining a temporary edge over competitors.
Step-by-step explanation:
A company's stratergy is increasingly effective the more it can match the company strategy to competitive conditions, allowing the firm to focus on its core competencies and succeed in a competitive market. Focusing on core competencies often results in a business that is more successful than those attempting to provide a wide range of products. This is because specialization in a specific area or product can lead to efficiencies and distinct competitive advantages.
By honing in on a specialized set of products or services, firms can leverage their expertise to innovate and operate more efficiently, which can translate into cost savings or higher quality goods and services that are valued by consumers. Moreover, in a market filled with competition, innovation serves as a critical component for a firm to distinguish itself and stay ahead of competitors, even if only temporarily. With this advantage, a company can enjoy above-normal profits before the market catches up.
Thus, aligning a company's strategy with its competitive environment and focusing on innovation within its core competencies can significantly impact the firm's success and profitability in the long term.