Download Understanding Strategic Positioning and Operational Effectiveness in Business - Prof. Yael and more Study notes Marketing in PDF only on Docsity! What is strategy? - operational effectiveness – performing the activities of creating competitive advantage (creating, producing, selling, and delivering a product) better. Faster and fewer defects than rivals (efficiency. Better utilize inputs. Reducing defects. Develop better products - productivity frontier – the maximum value a company can deliver at a given cost, given the best available technology, skills, and management techniques. - competitive convergence – the more indistinguishable companies are from each other. - strategic positioning – attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. Perform different activities from rivals or perform same activities better. -Operational effectiveness is not strategy – cant translate gains into sustainable profits. - moving more towards management tools than strategy. - overall advantage results from all company’s activities. Operational effectiveness is faltering because competitive advantage only stays for a little while. - First reason why OE fails is the rapid diffusion of best practices. Competitors quickly imitate management techniques, new technologies, input improvements etc. - Second, the more benchmarking companies do the more they look alike. Outsourcing activities to efficient third parties (the same ones other companies use). Convergent strategies. – Competitive strategy is about being different. Ikea and Southwest airlines have strategic positions that are unique - Origins of strategic positioning – 1. positioning can be based on producing a subset of an industrys product or service (variety based positioning). Only producing oil and giving oil changes. 2. serving most or all needs of a particular group of customers (needs based positioning) 3. segmenting customers who are accessible in deifferent ways. The best configuration of activities to reach them is different (access based positioning) - positioning is always of a function of the supply (activities) side. -STRATEGY – creation of a unique and valuable position, involving a different set of activities. If this were not the case then OE would determine performance. Making trade offsin competing. What not to do. Creating fit among a companys activities. Do many things well. - Trade offs for strategic positioning. 1. a competitor can reposition itself to match the superior performer. 2. straddling – match the benefits of a successful position while maintaining its position. - 3 reasons – 1. inconsistencies in image or reputation. Reimagining. 2. arise from activities themselves. Ikea cant tailor to high maintenance customers. 3. arise from limits on internal coordination and control. – Continental could not afford to compete with price while also paying standard travel agent commission. - competitive advantage comes from the way activities fit and reinforce one another. - Types of fit – first order is simple consistency. Second order occurs when activities are reinforcing. Third order goes beyond reinforcement to optimization of effort. - Deepening a position involves making the company’s activities more distinctive, strengthening fit, and communicating the strategy better to those customers who should value it. – strong leaders willing to make choices are essential. Managers must know the difference between OE and strategy. Managing the development process - Multidimensional scaling is amathematical technique for analyzing the perceived similarity of a set of products or services. Ask to compare how like two products in the same market are. Make a similarity matrix. Quetzal - offered a contract to buy what could make them 4 million in revenue but at the expense of providing more replicas. This might effect other dealers and current customers. Aaker - most important business scope decision is what prducts or segments to avoid because resources can be used elsewhere - Scope of business is products offered, markets served, competitors choosen to compete with and by its vertical integration. – Scope dynamics – what markets will be entered - market expansion, market penetration, product expansion, diversification - Investment alternatives – invest to grow, invest only to maintain the existing position, milk the business by minimizing investment, recover as many of the assets as possible by liquidating or divesting the business.
