What is strategy?
Strategy is the creation of a unique and valuable position, involving a different set of activities such as:
* Few needs of many customers
* Broad needs of few customers
* Broad needs of many customers in a narrow market
Today, in this globalized world, each and every sector of economy has been integrated into a single platform by technology. The businesses and markets are becoming dynamic and advancement in technology have questioned the sustainability of competitive advantage. All the industries and organizations all over the world are under tremendous pressure to improve productivity, quality and speed. In order to manage these factors, managers are using ...view middle of the document...
Operational effectiveness is not strategy because it delivers greater efficiency while strategy delivers great value. A company can outperform rivals only if it can establish a difference that it can preserve.
ii. Strategy rests on Unique Activities
Competitive advantage can be only achieved if the product or the services a company provides differs from the other companies. Companies tend to differ from the other companies by choosing to do activities differently than the rivals. As mentioned in the article, the uniqueness that the Southwest Airlines could provide, no other airlines could offer such a variety of products or services. They are able to attract customers as they deliver low cost, convenient services but that also depends on the route they are following. The strategic positions can be based on customers need, customers accessibility, or the variety of a company’s products or services.
iii. A sustainable strategic position requires trade-offs
Sustainable strategic position is the position that the company wishes to attain so that they could gain stability and profitability in the long run.
According to Porter, a sustainable advantage cannot be guaranteed by simply choosing a unique position, as competitors will imitate a valuable position in one of the two following ways:
* A competitor can choose to reposition itself to match the superior performer.
* A competitor can seek to match the benefits of a successful position while maintaining its existing position (known as straddling).
Thus, in order for a strategic position to be sustainable there must be trade-offs with other positions. "A trade-off means that more of one thing necessitates less of another”.
For example, iphone. They spent so much in research and skilled human resources and at last they were able to introduce finest product in the market. but they had to sacrifice the low cost price i.e, the product are expensive. They had first mover advantage and hence they were able to succeed. Similarly, Colors, Micromax, came to the market later, they did not have to spend so much time and money on research and development hence they had the advantage of low price product but they had to compromise quality. And their target group is low income group. Eg. People of South east Asia.
iv. Fit Drives both competitive advantage and sustainability.
Strategic fit expresses the degree to which an organization is matching its resources and capabilities with the opportunities in the external environment. The matching takes place...