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Strategic positioning is the positioning of an organization (unit) in the future, while taking into account the volatile environment, plus the systematic recognition of that positioning.
The strategic positioning of an organization includes the planning of the desired future position of the organization. On the basis of present and foreseeable progress, and the making of plans to realize that positioning.
The strategic positioning method is devised from the business world. The method is targeted at ensuring the functioning of the organization. The strategy determines the contents and the character of the organization's activities.
Terms, such as legitimacy, survival, market positioning, relationship with environment and choice for a certain work area, come up in this context.
Subjects, which have been developed reasonably well in literature on strategic management, include information gathering techniques, examination techniques and planning schemes. There are no such methods have been devised for exploring the future:
Various questions must be asked with strategic positioning:
How does the future look like?
How could the organization be roughly positioned in the future?
How are things in the organization at present?
How can opportunities be grabbed and how can threats be met?
How can this be put into practice in a logical way?
Strategic positioning includes the following steps:
Choice of strategy
1. The future
Future plans are based on the past and present. The waves of the future are always interpreted on the basis of the wavelets which are foreseeable in the present.
Trend research according to Naisbitt (shifts in the basically closed news circuit) is based on small shifts which define future developments. If we can control today's trends, we may perhaps use them into the future.
It is important for everybody to map the non-changing developments which are related to the own organization. A first exploration of the strategic positioning can be constituted by extrapolating the trends and by gearing them to the field in which the own organization operates.
2. Information collection
Information collection includes internal research and external research.
Where does our organization stand? What internal factors are important for survival and for failure or success, both in a positive and in a negative sense? It is better to draw up a list of own relevant criteria, which are applicable to the department you are working in.
This will help determine the strength and weaknesses of your own organization.
What pressures from outside can be highly importance to the realization of the organization's objectives? Or what external critical factors are there?
Standard lists of such factors are available but the organization should draw its own relevant criteria, which do not only belong to the sector but also, for instance, to region-specific developments. This will explain the threats and opportunities of the organization.
Future opportunities and threats are also calculated occasionally by making use of extrapolation (trend curves or mathematical models) or by consulting experts in a systemized way. Or by devising one or more empirically founded, plausible constructions of the anticipated developments (scenarios).
One can make an analysis of the strategic position by comparing the data of the internal and external researches with each other. A widely used method is the SWOT analysis. Four lists of factors are drawn up: Strong, Weak Opportunity and Threat. This is usually used in a group meeting of members of the organization.
Another method is the Product/Market Matrix. Questions raised with this method are: Can you, going away from the existing product range, think of new applications (markets)? And can you supply markets where you are already on firm ground with a variation on your product? Example
New Zealand sheep farms devising a new application of wool at times of stiff competition on the wool market: absorption of oil spills at sea, being an existing product on a new market.
A third method is the Portfolio analysis, which is devised by stock exchange operators, it emphasizes on, "Which securities must we hold and which must we sell?"
Example: A prime example of that portfolio is that of the Boston Consultants Group, which keeps the investment or the growth of the firm of industry (Y-axis) against the profit or the market share (X-axis). Four fields are derived: the stars, the milk cows, the wild cats and the dogs.
Note: for NGO's, the term profit has to be translated in the immaterial yield that should be derived: some distress that is solved; some social interest that is served. The instruments of strategic positioning are devised for the business but capable enough to be used for the NGO as well.
4. Choice of strategy
After the analysis of internal and external critical factors and, on the basis of the calculated chances of seizing opportunities and meeting threats - the positioning will be determined. It would be quite fair to make a very specific positioning choice: we focus at becoming an organization which (a description follows, by what the position choice is characterized, in terms of products, customers and image).
Once such a choice has been made, it should be studied what strategy is appropriate to materialize that choice of position. In theory, rough strategies are hinted, such as stabilization, growth, shrinking and turnaround. The organization can probably indicate much more specifically and accurately what strategy must be chosen. Growth in a certain direction, orientation towards a certain market, etc.
Theory is translated into what is to be done in order to gain benefit from that positioning.
Example of elements of a strategic plan
Business plan, for example aimed at:
Market penetration: Bringing products on new market;
Market development: Growth of new product on existing market;
Product development or diversification: new product on new market.
Internal growth: strengthening of the own position on the existing market;
Product plan: Selection of products or services, determination of their quality, effect of a product (result for customer).
Marketing plan: Aims at marketing mix: product policy, promotion policy, distribution policy and price policy (cost price / market price / competition price?).
Production plan: Choice of equipment, choice of location and of the production process, production standards, layout. Production planning, production management, stock control, quality control, cost control, maintenance.
Research plan: Aims at technological development or product modification.
Personnel & Organization Plan: Positions, recruitment and selection, career development, organizational structure, training and education, organization culture, performance assessment, terms of employment, relationship with the representative advisory committee, organized consultations, trade unions, promotion policy.
Purchase plan: Refers to evaluation of suppliers, account management, make-or-buy.
Logistical plan: Transport management, stock and handling, run-through times, term of delivery.
Financial plan: refers to registration and analysis of financial data, responsibility for availability of financing.
Information plan: Collecting and processing of data.
Quality plan: Consistency, competence, accessibility, communication, credibility, understanding, safety, appearance.
Public Relations plan: Both internal (mission, propagation of business objectives, motivation of staff) and external (propagation of goodwill of the organization).
Strategic management issues
Ansoff introduced the concept of "Strategic Issue Management" in 1980. A strategic issue is "…a forthcoming development, either inside or outside of the organization, which is likely to have an important impact on the ability of the enterprise to meet its objectives." He further says, an issue can be a forthcoming opportunity in the organization's environment or an internal strength, as well as an external threat or an internal weakness, respectively. (Organizational Future Orientation, 2010)
Case Study (based on facts of 2010)
Door Darshan is the India's prime public service broadcaster with more than 1,000 transmitters providing transmission 90% of the country's population across on approximate 70 million homes. It has over 20,000 employees managing its network. Recent years have seen increasing competition from many private channels numbering more than 65, and the cable and satellite operators (C & S). The C & S. network is providing its transmission to nearly 30 million homes and is growing rapidly. DD's business model is based on selling half -- hour slots of commercial time to the programme producers and taking from them a minimum guarantee. For example, the present tariff for the first 20 episodes of a programme Rs.30 lakhs plus the cost of production of the programme. In exchange, the producers get 780 seconds of commercial time that he can sell to advertisers and can earn revenue. Break-even point for producers, at the present rates, thus is Rs.75,000 for a 10 second advertising spot. If the programme goes above 20 episodes, the minimum guarantee is Rs.65 lakhs for which the producers has to charge Rs.1,15,000 for a 10 second spot in order to break-even. It is at this point the advertisers face a problem -- the competitive rates for a 10 second spot is Rs.50,000. Procedures are possessive about buying commercial time on DD. As a result, the DD's projected growth of revenue is only commercial time on DD. As a result, the DD's projected increase of revenue is only 6- 10% as against 50-60% for the private sector channels. Software suppliers, advertisers and audiences are…[continue]
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