Strategic Position Strategic Choices and Strategy Implementation

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:

The future

Information collection

Analysis

Choice of strategy

Implementation

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.

Internal 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.

External research

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).

3. Analysis

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.

5. Implementation

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 getting away from DD, owing to its unrealistic pricing policy. DD has options before it. First, it should privatize, second it should remain purely public service broadcaster and third, a middle path. The challenge seems to be achievable as DD's immense potential and emerge as a key player in the mass media.

i. What is the best option, in your view, for DD?

ii. Analyze the SWOT factors the DD has.

iii. Why do you think that the proposed alternative is the best?

Answer

(i) For several years Doordarshan was the sole broadcaster of television programmes in India. After the opening of the sector to the private entrepreneur (cable and satellite channels), the market has seen major changes. The number of channels has come into the market and the quality of programmes has improved, backed by technology, has improved. In terms of quality of programmers, advertisement, outreach activities, the broadcasting has become a popular business. Broadcasters too have realised the great business potential in the market. But for this, policies need to be rationalized and be opened to the scope of innovativeness. This would not come by simply going to more areas or without removing bureaucratic hurdles. Strategically the DD needs to undergo a policy improvement. DD, out of three options, namely privatization, public service broadcaster or a middle path, can choose the third one, i.e. A combination of both. The whole privatization does not seem logical under the diversified political scenario. Nor it would be desirable to give the broadcasting emotively in the private hand as it proves to be a great means of communication of many socially lead public programmers. The government could also think in term of creating a corporation (as it did by creating Prasar Bharti) and provide reasonable independence to DD. So, far as its advertisement tariff is concerned that can be made compatible. However, at the same time cost of advertising is to be compared with the reach enjoyed by the doordarshan. The number of viewers may be far more to justify higher tariffs.

(ii) The SWOT analyses involves analysis of strengths, weaknesses, opportunities and threats of an organisation. SWOT factors that are evidently available to the Doordarshan are as follows:

S -- Strength

Covering 90% of population across 70 million homes against only 30 million home by C & S.

Over 20,000 employees and over 1000 transmitters.

W -- Weakness

Non-compromising pricing strategy.

Certain sections of the society do not regard Door Darshan as authentic.

Quality of programs is not as good as compared to C & S. network

O -- Opportunities

Infrastructure can be leased out to cable and satellite channel.

Digital terrestrial transmission.

Regional focused channels.

Allotment of time, slots to other broadcasters.

T -- Threats

Desertion of advertisers and producers may result in loss of revenues.

Due to quality of program the reach of C & S. network is rapidly expanding.

As the C & S. network need the trained staff, some employees of DD may shift to C&S network.

The private channels are using best of the market-technology.

(iii) It is suggested that the DD should follow a middle path. It should have a mix of both the options. It should economized on its operational aspects and ensure more productivity in term of revenue generation and optimization of use of its infrastructure. Wherever, the capacities are underutilized, these may be leased out to the private operations. At the same time quality and viewership of programmes should be improved. Bureaucracy may reduce new strategic initiatives or make the organization less transparent. Complete privatization can fetch a good sum and may solve many of the managerial and operational problems. However, complete public monopoly is not advisable because that denies the government to fully exploit the avenue for social and public use. The government will also lose out as it will not be able to take advantage of rising potential of the market. (Career forums, 2010)

Corporate Governance

California public employees Retirement System defines, the Global principles of accountable corporate governance in the following way:

Everywhere shareholders are re-examining their relationships with company bosses -- what is known as their system of 'corporate governance.' Every country has its own, distinct brand of corporate governance, reflecting its legal, regulatory and tax regimes… The problem of how to make bosses accountable has been around ever since the public limited company was invented in the 19th century, for the first time separating the owners of firms from the managers who run them…."

"Corporate Governance: Watching the Boss," THE ECONOMIST 3

(Jan. 29, 1994).

PRINCIPLES of ACCOUNTABLE CORPORATE GOVERNANCE

A. Core Principles of Accountable Corporate Governance

1. Optimizing Shareowner Return

2. Director Accountability

3. Transparency of Company Information

4. One-Share/One-Vote

5. Proxy Materials

6. Adopt a Code of Best Practices

7. Long-term Strategic Vision

8. Shareowner Access to Director Nominations (The California Public Employees Retirement System, 2011)

Corporate governance is linked with social responsibility. Most of the scholars argue that Corporate Governance of the organization is strongly related with the social responsibility of the organization that is what it owes to the society as a whole.

Cultural dimensions

As we discuss earlier that choice of the strategy is important in the strategic positioning. Choice of the strategy largely depends upon the culture of the organization Hofstede model is very popular in this regard and presents a theory of cultural dimensions. Hofstede model is presented below:

Power Distance Index (PDI)

Power Distance Index (PDI) that is the range to which the less powerful members of organizations and institutions (like the family) agreed upon and expect that power is distributed unfairly. This represents inequality. It proposes that the followers as much as by the leaders ratify a society's level of inequality. Power and inequality, of course, are extremely basic facts of any society and anybody with some international experience will be aware that 'all societies are unequal, but some are more unequal than others'.

Higher the power distance index is in the society there is lower upward mobility of its citizens.

Individualism (IDV)

Individualism (IDV) on the one side vs. its opposite, collectivism, individuals are inte-grated into groups to that degree. On the individualist side we find societies in which the ties between individuals are weak: everyone is expected to look after him/herself and his/her immediate family.However, On the collectivist side, we find societies in which people from birth onwards are integrated into strong, cohesive in-groups, often extended families (with uncles, aunts and grandparents) which continue protecting them in exchange for unquestioning loyalty. The word 'collectivism' in this sense has no political meaning: it refers to the group, not to the state. Again, the issue addressed by this dimension is an extremely fundamental one, regarding all societies in the world.

Higher individualism indicates that individual rights are paramount within society. Individuals may tend to form a larger number of loosen relationships.

Masculinity (MAS)

Masculinity (MAS) versus its opposite, femininity means distribution of roles between the genders, which is another basic issue for any society to which a range of solutions are found. The IBM studies revealed that (a) women's values differ less among societies than men's values; (b) men's values from one country to another contain a dimension from very assertive and competitive and maximally different from women's values . The assertive role has been called 'masculine' and the modest, caring pole 'feminine'. The women in feminine countries have the same modest, caring values as the men; in the masculine countries, they are somewhat assertive and competitive, but not as much as the men are, so that these countries show a gap between men's values and women's values.