Global Business Strategy Defined

By M. Isi Eromosele


Strategy attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company.


Strategy is the creation of a unique and valuable market position, involving a different set of activities. Strategic position emerges from three distinct sources:


  • serving few needs of many customers
  • serving broad needs of few customers
  • serving broad needs of many customers in a narrow market

Strategy requires a company to make trade-offs in competing - to choose what not to do.


Some competitive activities are incompatible; thus, gains in one area can be achieved only at the expense of another area. For example, Neutrogena soap is positioned more as a medicinal product than as a cleansing agent.


Strategy involves creating fit among a company’s activities. Fit has to do with the ways a company’s activities interact and reinforce one another. Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them.


Employees need guidance about how to deepen a company’s strategic position rather than broaden or compromise it. The goal is to extend the company’s uniqueness while strengthening the fit among its activities.


This process of deciding which target group of customers and needs to serve requires discipline, the ability to set limits, and forthright communication. Clearly, strategy and leadership are inextricably linked.


Today, positioning, once the heart of strategy is rejected as too static for today’s dynamic markets and changing technologies. According to the new paradigm, rivals can quickly copy any market position and competitive advantage is, at best, temporary.


The root of the problem is the failure to distinguish between operational effectiveness and strategy. In their quest for productivity gains, quality and speed, many companies have resorted to utilizing diverse management tools.


Although the resulting operational improvements have often been dramatic, many companies have been frustrated by their inability to translate those gains into sustainable profitability. Why?


This is because these implementations have not been based on a strong underpinning strategy. As such, these companies have not been able to develop viable, sustainable and profitable market positions.


Operational effectiveness and strategy are both essential to superior performance, which, after all, is the primary goal of any enterprise. But they work in very different ways.


A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both.


Operational effectiveness (OE) means performing similar activities better than rivals perform them. Operational effectiveness includes but is not limited to efficiency.


In contrast, strategic positioning means performing activities differently from rivals’ or performing similar activities in different ways.


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


Copyright Control © 2011 Oseme Group

0 comments:

Copyright 2010 - 2013 Oseme Consulting