Business Strategy Differentiation – Strategic planning involves translating inputs from process analysis into business plans. At the very least, this Plan includes the creation of a competitive plan that will clearly reflect the organization’s strengths and weaknesses and market realities, and is consistent with its goals and values. Management consultant and Harvard Business School professor Michael Porter developed a classic strategy framework, called Porter’s Generic Competitive Strategies, shown in Figure 1.[1]
This model emphasizes that there are two possible ways to achieve competitive advantage: price (price) or differentiation. Two options linked to the organization’s desired niche – industry or market niche – suggest appropriate strategy: cost leadership; Determines the spectrum or focus. In short, the goal of an organization pursuing a cost leadership strategy is to be the lowest cost producer in the industry. The purpose of an organization that follows a differentiation strategy is to distinguish the company and its products or services based on one or more characteristics that are valued by customers and that it can transfer. The difference affects the premium price.
Business Strategy Differentiation
A strategic focus strategy suitable for specialized marketing teams has two dimensions: cost and differentiation. An organization that follows a cost-focused strategy will strive to be the lowest-cost producer in its target market. Different focus strategies include differentiation based on the needs of consumers in that market segment – think Harley-Davidson motorcycles or Lululemon sportswear. Nevertheless, a few parts distinguish this part of the focus-price, which a special manufacturer works; product Must have manufacturing or distribution requirements. Price targeting exploits differences in pricing behavior and market niches, while differentiation targeting exploits the unique needs (perceived as food barriers or generational preference differences) of consumers market in niche markets. As discussed in Chapter 2, “Your Business Idea: Finding Profits”; It is very important for any business to understand and identify the value of customers. To do this, you must be clear about your potential customers. But simply identifying customer value is not enough. An organization must be able to deliver customer value within critical constraints. One of these limitations is related to the competition-award available; At any cost. In addition, what other services can the company provide? The second important barrier is the availability of infrastructure and business facilities. Assets are money; buildings, equipment, including things like the right to work and employees.
Positioning Systems Blog
Here is an example: A hotel has defined its main customers as high-end customers in the business district of a large city. The restaurant recognizes that there are many competitors who are interested in providing the same customers with the same high quality dining experience. Our restaurant is able to offer five-star gourmet food to its customers. It also provides excellent service. If similar restaurants cannot provide similar food to the sample restaurant. For example, a hotel will be competitive. For example if a restaurant offers delicious food at a relatively low price compared to its competitors. It seems useful at first. However, If the price charged is less than the cost of providing food; In this case the work cannot be maintained. Of course, restaurants are an inevitable part of the workplace. While providing good customer service can be a necessary condition for business survival, it is not a sufficient condition by itself.
So how do you balance the need to deliver customer value within available resources while constantly monitoring your competitors’ practices? What a company needs is to have a plan on how the company can deliver value to its customers. It is a practice that tries to provide value to customers within the constraints of the competitive environment and the resources available to the company. .
The leader of the army, turned out to be a general art. Commanders are responsible for gathering the necessary resources, organizing the army and basic battle planning. Similarly, Like business owners, company leaders should have a clear idea of the desired results. to access resources; You are expected to hire and train staff and develop programs to achieve those results. In this sense, all Businesses, large and small, have a plan, whether they are well written in a formal business plan or in the mind of the business owner.
There are many definitions of business strategy. The following is a partial list of explanations given by some of the key experts in the field:
Focus Strategy: Meaning, Types Of Focus Strategy
Strategy means an objective, a set of goals or objectives, the main policies and procedures for achieving those goals, and a specific process for defining what a company’s business will be or do and what kind of company it will be or be. do. be.Kenneth Arrow, The Concept of Corporate Strategy (Homewood, IL: Irwin, 1971), 28.
Determining the company’s long-term goals and objectives and adopting a course of action and allocating the necessary resources to achieve those goals. Alfred Chandler. Strategy and Structure (Cambridge, MA: MIT Press, 1962); 13.
In other words, business strategy is competitive advantage. Kenichi Ohmae The Mind of the Strategist (Harmondsworth, UK: Penguin Books, 1983), 6.
A company’s strategy is the approach it takes to provide value to its customers within the constraints of the competitive environment and the resources available to the company.
Strategic Planning By A Mckinsey Alum
Whatever definition the plan uses; It is often difficult to separate it from two other terms: strategic planning and strategic management. These two terms are often thought of as being on the side of large companies, not for small and medium businesses. This is somewhat understandable. The origins of strategic planning as a separate discipline occurred more than fifty years ago. It is primarily concerned with helping large national or international businesses organize their operations. Over the past fifty years, strategic planning and intervention has generated a large literature. Mintzberg, Lampel, Ahlstrand, and critical analysis of the field; Ten specific schools of thought about strategic planning have been identified. Henry Mintzberg, Joseph Lampel and Bruce Ahlstrand; Strategic Safari: A Journey through the Wilds of Strategic Management (New York: Free Press, 1998). From the number of different schools, it is clear that the warning has not received confirmation. Strategic planning is viewed as a set of processes and tools that help organizations achieve their defined goals and objectives. Process management is viewed as the organizational process that you use to implement strategic plans. Some of the models and approaches to strategic planning and process management can be complex and difficult to implement for all but the largest businesses. In addition, Planning usually involves filling out forms; It became a matter of government, going to meetings and making moves to create a document known as a plan. What is sometimes lost in this discussion is the essence of strategic thinking. Strategic thinking is a creative analysis of the competitive landscape and a deep understanding of customer value. It should be the driver of the whole system (see Figure 5.1 “Strategy Troika”). This concept is often forgotten in large government agencies.
Delusional thinkers violate commonly understood norms to achieve their goals. This is particularly evident among generals such as Alexander the Great or Hannibal. Robert E. Lee often violated military principles such as dividing his troops. General Douglas MacArthur surprised the North Koreans by boldly falling behind enemy lines at Incon. This shift in thinking is also present in large business leaders.
Solomon and Friedman shared a basic model of good theory. Paul Solman and Thomas Friedman; Life and Death on the Corporate Battlefield: Corporations Win; Lost Survival (New York: Simon and Schuster, 1982), 24–27. Wilson Harrell ran a small white soap company known as Formula 409 with national distribution. In 1967, Procter & Gamble was threatening Formula 409’s position in the same cleaning market. Procter & Gamble is a major product manufacturer known for its marketing prowess. Procter & Gamble launched a major marketing research program to promote its comparable product called Cinch. Obviously, larger companies have greater profits. Harrell learns that Procter & Gamble will be conducting market research. Unexpectedly decided to do. Instead of facing this big competitor directly. He cut advertising spending in Denver and stopped promoting his Formula 409. The result has been impressive results for Procter & Gamble and the company is very excited about the prospects for Cinch. Procter & Gamble National Sales Campaign Start Now However, before the company started, Harrell introduced a promotion of his own. He took a sixteen ounce bottle of Formula 409 and attached it to a half gallon size.