Competing to be the best or Unique???

Businesses have to take millions of decisions concerning their production, combination of products, rsource allocation, priority issues and a host of other factors. What binds these decisions in a schema of logical order, is called the strategy of the firm.
                However, we need to understand that there is a differenec between strategy and operational effectiveness. Operational Effectiveness is applying the best practices available for optimal utilization of resources. Its basically doing similar things in a better way. Strategic Positioning on the other hand is creating a unique and valuable position, involving a different set of activities. The difference, basically, lies in the way the company looks at increasing shareholder wealth. If it wants to reduce costs, it has to gain more efficiency in terms of resource utilization, acquiring raw materials and usage of better technology. However, the positioning of the organization does not change to that extent throughout this exercise.On the other hand, if the company wants to focus on generating greater sales through awareness and promotion in the consumer segments that it targets, then it has to go for strategic positioning.

Traditional Strategy “Operational Effectiveness”	Today’s Strategy “Strategic Processes”
Create a defendable position	Enable dynamic strategic repositioning
Acquire or build valuable assets	Facilitate employee detection & reaction to change
Widely allocate resources to assets	Enable managers to mobilize & reconfigure resources
Perform activities faster or with fewer defects	Perform different activities or activities in different ways
RESULTS	RESULTS
Sustained competitive advantage	Organizational agility
Long-term performance	Capturing market resources faster than the competition

                       Traditional models of strategy can be problematic as managers often pay too much for acquisitions, business strategies are quickly outdated, and competitive advantage is rarely sustained for more than a few years. Particularly in today’s volatile markets, it is difficult to create a defendable position and organizations must instead strive toward strategic positioning, a sustainable competitive advantage that makes an organization distinct by performing different activities from rivals or performing similar activities in different ways. Strategic positioning can be realized by focusing on a few key strategic processes and supporting those underlying processes with simple rules and strategic principles.

              Positioning is partly a product game and partly a mind game. You need to create an image that product X offered by company Y is indispensable - at least in the minds of the consumer.

Underlying strategic processes that identify how strategic positioning will be accomplished include:

·         Variety-Based Positioning- Focusing on a single product or service that is a mainstay of the organization

For over 50 years Fevicol in India has focused solely on the production of adhesives. As a result, they control almost ½ of the adhesives market in India. Likewise, the Birla Sunlife Insurance, a player in the insurance industry, focuses on it superior fund management capabilities so that it can deliver better returns on its investment-linked products, giving it success in this industry.

·         Needs-Based Positioning- Serving most or all of the needs of a particular group of customers

Big Bazaar, the largest retailer in India, seeks to meet all the shopping needs of its target customer, middle class buyers who want variety at competitive prices. In contrast, some organizations focus on serving the needs of a particular customer. For example, assigning one sophisticated account officer for every 14 families, Bessemer Trust Company (a private banking organization) targets families with a minimum of $5 million in investable assets who want capital preservation combined with wealth accumulation. Citibank’s private bank, on the other hand, serves clients with minimum assets of about $250,000 who want convenient access to loans and refer customers to Citibank specialists for other services.

·         Access-Based Positioning- Configuring activities to reach customers who are accessible in different ways (i.e., Rural vs. urban, small vs. large, or densely rather than sparsely situated customers)

PVR Cinemas operates movie theaters exclusively in tier-I cities and Metros. PVR Gold Class has more comfortable seats, a lavish theatre and service-at-seat but at a higher price. It is for the more affluent, comfort-loving movie-goers while the PVR multiplex with 80-100 seats is available for the more price sensitive consumers

                        Strategy is the way of creating value and sustaining it through the evolution process. Every aspect of their operation aims to improve and change in a way that would enable them to create a sustainable competitive advantage and benchmark the industrial processes to create a strong fundamental base for the company.

                       Which then leads us to the question – What makes these positions or strategies unique? For the answer, a small wait for the next post.

Cheers!!!
Signing off,
Shauvik