Establishing A Sustained Strategic Position

By M. Isi Eromosele

Choosing a unique strategic position is not enough to guarantee a sustainable market advantage. A value-based position will result in being imitated by competitors. A competitor can reposition itself to match the company’s superior performance. A second and more common type of imitation is straddling. The straddling company seeks to match the benefits of a successful position while maintaining its existing position. It grafts new features, services or technologies unto the activities it already performs.

A strategic position is unsustainable without there being trade-offs with other established positions. Trade-offs occurs when activities are incompatible. A trade-off means one thing necessitates less of another. Trade offs create the need for choice and protect against re-positioners and straddlers.

Trade-offs arise for three reasons.

• The first is when a company suffers from inconsistencies or bad reputation. A company known for delivery good value may lack credibility for other reasons, confusing its customers, undermining its own reputation.
• Second, and even more important, trade-offs arise from certain activities. Different positions require different product configurations, different staff competencies and different management systems. Many trade-offs reflect lack of flexibility in management systems within a company. However, trade-offs can be more basic. Value is shattered when a necessary activity is overdesigned or underdesigned for use.
• Finally, trade-offs arise from limits on internal coordination and control. Companies that try to be all things to their customers risk confusion as employees try to make decisions outside of a clear framework.

Positioning trade-offs are all-encompassing in competitive markets and essential to strategy. They create the need for choice and purposefully limit what the company can offer. They deter straddling and repositioning because competitors who engage in those approaches undermine their own strategies and degrade the value of their activities.

Generally, trade-offs between cost and quality occur primarily when there is redundancy, inefficiencies, poor control and weak coordination within a company. Simultaneous improvements of costs and differentiation are possible only when a company begins far behind and strive to catch up with its competitors. When the company has achieved current best practices, the trade-off between cost and differentiation becomes very real.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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