Strategy? Strategic Positioning Means Offering Different Goods

¶ … strategy? Strategic positioning means offering different goods and services from rivals or offering goods and services in a unique way. The company must provide a unique product or service, in contrast to its rivals. This might include offering a relatively narrow range of services to a broad range of customers or serving the many needs of a targeted niche market. The reverse is also true: a company can serve broad needs for a narrow market and narrow needs for a niche market.

Strategy requires trade-offs: no company can do everything well and be all things to all people. There must be a good 'fit' between disparate company activities to achieve organizational efficiency. Operational effectiveness (OE) means performing certain actions better than competitors such as improving quality and speed. A. OE has received increasing emphasis in management literature in recent decades. B.

Maximizing the productivity frontier to improve organizational efficiency is critical for OE: this means being more productive by pushing the frontier using new techniques (such as Total Quality Management practices) or technology. Companies can 'do more with less' (fewer labor and input costs) through OE. C. But regardless of OE, reducing competitive convergence (i.e., not being the same as one's competitors in terms of goods and services and prices) is still important. D. OE is essential but not enough. E.

OE is not the same as strategy: a company can max out the benefits of technology, for example, but not use that efficiency to achieve a differentiated status from rivals. 1. OE is not enough because it raises the bar for everyone in the industry regarding productivity, once again causing competitive convergence. 2. The more companies benchmark, the more they all look alike and mergers are not a solution because they do not address the real problem of differentiation. F.

Strategy, in contrast to OE is about being different, not just efficient, although OE can be one way amongst many to achieve that differentiated status. III. There are a number of ways to differentiate goods and services. A. Low-cost difference: Offering items at lower cost conveys an obvious advantage for price-sensitive customers. B. Variety-based positioning entails offering multiple services using distinct activities. C. Needs-based positioning means targeting a very specific segment of customers and focusing on their needs in a broad or narrow fashion. D.

Access-based positioning means serving the needs of customers in a specific geographical area. E. Problems of maximizing OE without strategy can be seen with Japanese companies, given that there is a strong emphasis in the culture on emulation which results in relatively undifferentiated goods. IV. Tradeoffs are demanded: all companies must make tradeoffs to maximize organizational efficiency. A.

Trying to do many things at once can pollute the brand image if the goods and services are seen as in conflict (for example, a budget brand trying to offer luxury services or vice versa). B. Also, organizational resources (human and otherwise are finite) and require different cultural orientations. This is not just true of physical input costs but also the capabilities of the employees that are hired. C. There are limits on internal controls: the types of processes that must be tracked are not standardized throughout all industries. V.

When companies differentiate, the items offered must be a good.