On competition chapter 2 what is strategy
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This document discusses key concepts from strategy, including operational effectiveness versus strategic positioning, types of strategic positioning, fit and sustainability, and the role of leadership. Some key points: - Operational effectiveness focuses on performing similar activities better than competitors, while strategic positioning means performing different activities or similar activities in different ways. - Strategic positioning relies on unique activities to deliver unique value and requires trade-offs in order to choose what not to do. - Fit among a company's activities is important for competitive advantage and sustainability, requiring consistency and reinforcement among activities. - Strong leadership is needed to define a clear strategy, make difficult choices and trade-offs, and provide discipline to implement the strategy.
On competition chapter 2 what is strategy
- 1. WHAT IS MOC studied by NIDA BUSINESS SCHOOL (FLEX’27) MOC 2nd CHAPTER STRATEGY ? CHAPTER2
- 2. Operational Effectiveness Is not STRATEGY For almost 2 decade • Learn to play by a new set of rule • Flexible to respond rapidly to competitive and market change Hyper-competition • Self-inflicted wound Root of problem • Speed, Quality, productivity and management tools Positioning (The heart of strategy) is rejected • Because it’s too static for dynamic market changing and changing technology
- 3. Operational Effectiveness(OE) means performing similar activities better than rival perform them Strategic positioning means performing different activities from rivals or performing similar activities in different ways. Non-pricebuyervaluedelivered Relative cost position high high low low
- 4. STRATEGY rests on UNIQUE activities Competitive strategy is about being different set of activities to deliver a unique mix of value
- 5. The origin of strategic position Variety-based positioning • Choice of product or service varieties Needs-based positioning • Serving most or all the needs of a particular group of customers Access-based positioning • Segmenting customers who are accessible in different way. However, positioning is not always a function of differences on the demand or customer side. Variety and access positioning in particular, do not rely on any customer difference Strategy is the creation of a unique and valuable position, involving a different set of activities.
- 6. A Sustainable Strategic Position Requires Trade-offs Why do Trade-offs arise? • Inconsistencies in image or reputation • Trade offs within activities themselves • Product features may be incompatible “You cannot be everything for everyone by having strategy, it means you have made a decision to trade off one thing with another” Michael E. Porter
- 7. Continental Airways Tried to compete in two ways : to be low cost on some routes and full service on others Southwest Airways Low-cost strategy • No meal • No seat assignment • No interline baggage transfers Strategy is making trade-offs in competing The essence of strategy is choosing what not to do
- 8. Fit drives both Competitive Advantage and Sustainability 1. Simple Consistency First-order fit is Simple consistency between each activity (function) and the overall strategy Ex. Vanguard 2. Activities are reinforcing Second-order fit occurs when activities are reinforcing Ex. Neutrogena 3. Optimization of effort Third-order fit goes beyond activity reinforcement Ex. The Gap Types of fit… How Fit work
- 9. “ ” “ ” FIT and SUSTAINABILITY Strategyis creating fit among a company’s activities. The success of a strategy depends on doing many things and integrating among them. If there is no fit among activities, there is no distinctive strategy and little sustainability. Strategicfitamong many activities is fundamental not only to competitive advantage but also to the sustainability of that advantage
- 10. FAILURE TO CHOOSE • Many companies and managers do not understand need of strategy • Imitating their competitor by flooded business information • Operating far from productivity frontier • Pressured to deliver tangible and measurable performance • Pursuit of operational effectiveness
- 11. GROWTH TRAP • Many managers tempted to incremental growth but blur strategy • Compromise in pursuit of growth is erode competitive advantage • Answer seen as revenue growth, but profit decline
- 12. PROFITABLE GROWTH • Concentrate in deepening a strategic position - Deepening make distinctiveness, strengthen fit and good communicate to valued customer - Extension the existing activity system, that are feasible and rivals would find impossible to match
- 13. ROLE OF LEADERSHIP • Cleared strategy depend on strong leadership - Leadership… Making choice/ trade-off/ defining and communicating company’s unique position/ provide the discipline/ teach lower level manager • Manager must clearly distinguish operational effectiveness from strategy
- 14. • Strategy renders choices about - What not to do - What to do • However, a company’s choice of a new position must be driven by the ability into a sustainable advantage
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