What is Strategy?
I. Operational Effectiveness Is Not Strategy
Most of the management tools that are used today are benchmarking, total quality management, partnering, outsourcing and reengineering. Companies use these tools to enhance the operational effectiveness, but fail to provide company with sustainable profitability. This is the reason failure of differentiate between strategy and operational effectiveness. Operational effectiveness and strategy are both necessary for the greater performance of an organization, but they work in different ways. Operational effectiveness performs similar activities better than the rivals perform them. It refers to many practices that allow a company to better utilize its inputs. In contrast strategy means performing different activities from rivals or performing similar activities in different ways. Porter said that a company can outperform rivals only if it can establish a difference it can preserve. The productivity frontier is the sum of all existing best practices at any given time. The competition based operational effectiveness moves the frontier outward and effectively raises the bar for everyone but such competition produces absolute improvement in operational effectiveness and no relative improvement for anyone.
II. Strategy Rests on Unique Activities
Competitive strategy means being different. According to Porter heart of strategy is choosing to perform activities different than rivals. Strategy is the creation of a unique and valuable position, involving a different set of activities. Strategic positions arise from three sources, which are not equally exclusive and often overlap. The first Variety-based positioning based on choices of products or services variations rather th...
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...overall strategy. Consistency makes it easier to communicate the strategy to customers, employees, and shareholders. Second-order fit arises when activities are reinforcing. Third-order fit goes beyond activity reinforcement. The fit among activities reduces cost or increases differentiation. If there is no fit among the activities, there is also no distinctive strategy and tiny sustainability.
V. Rediscovering Strategy
External changes can pose a threat to a company’s strategy a greater threat to strategy arises from within the company. One way to approach to persevering growth and reinforcing strategy is to focus on contingent a strategic position rather than broadening and compromising it. A company should choose its new position depending on its ability to find new trade-offs and influence a new system of balancing activities into a maintainable advantage.
23), a strategy is competing differently using a set of actions to perform better over rivals and achieve greater profitability. It is about choosing to be different and making the correct choices to provide direction and guidance to employees and the company on what to do and what not to do.
The corporate and operations strategy must be intertwined (Jacobs & Chase, 2013). Operations and supply chain strategies are “the setting of board policies and plans that will guide the use of the resources needed by the firm to implement its corporate strategy (Jacobs & Chase, 2013).” Basically, operational strategies correspond to the goals of the corporation, and are how the organization plans on operating in order to on meet the goals of the larger
Business strategy is the means by which firm’s plans to achieve its goals and objectives. It can also be termed as organization long-term planning. The strategy covers periods between 3-5 years and sometimes longer. Businesses use two major types of strategy, general or generic and competitive strategies. The overall strategy involves strategies of growth, globalization and retrenchment. The competitive advantage includes low pricing, product and customer differentiation. We will look at the business strategy used by Marks and Spenser (Cole, 1997). The company is a British multinational located at Westminster London and specializes in clothes and luxurious food products.
Arthur, A., Thompson, Margaret, A., Peteraf, John, E. Gamble, A., J., Strickland III. (2014). Crafting & Executing Strategy: The Quest for Competitive Advantage 19e: Concepts & Cases. C6-C25.
Operations refers to the transformation of raw materials(inputs) into finished products(outputs). The operations process is one of the key business functions and is a crucial component to business success. Like every business, Qantas is affected by many internal and external influences requiring it to have effective strategies to respond to these influences. Businesses that are able to adopt and utilise effective operational strategies are able to quickly adapt and either reduce or take advantage of these influences that impact the business. The effectiveness of these strategies can measured by Qantas’ performance and whether or not it is able to hold it’s competitive advantage. How well these strategies respond to the influences on operations will determine the level of success that Qantas achieves.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
Competitive strategy is a long-term action plan that is devised to help a company gains the competitive advantages over its competitors. There are Four Porter’s Competitive Strategy which including cost leadership, differentiation, cost-focused and focused-differentiation.
Miles& Snow’s typology emphasize on alignment and consistency. All three options will work for a company, but the key to its success is that the company must be aligned properly, consistent with its action and utilize clear and effective communication (Parnell, 2014).
Numerous definitions of strategy exist, in most circumstances strategy can loosely be explained as an overall plan of deployment of resources to ascertain a favourable position within a market (Zablah, Bellenger and Johnston 2004; Grant 1994, p 14). Further, imbedded in many successful organisations are strategies, the importance of which is to remain relevant in the market, and successful in the various attributes of business; profiteering, employee motivation, maintaining sustainable core competencies, effectiveness in operation, or efficiency in the conduction of operations. Therefore challenges involved in the formulation and implementation of a strategy can revolve around the overall external market, as well as internal
Porter, M. E., 1999. The Five Forces that Shape Competitive Strategy. Harvard business review, p. 80.
The definition mentioned above shows that every positioning strategy could be fragmented down mainly into three sub-components interrelated to each other:
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 25-40.
The positioning school of strategy emphasizes making a strategy based on proper market analysis and logic so that organization’s product would have a dominant position in the market against other competitors. Furthermore, the positional school of strategy encourages competitive advantage over competitors while using decision-making and performance measurement tools such as the Porter’s five forces and the Boston Consulting Group Matrix to determine how to maintain dominance in the
...ompletes an analytical assessment of a firm. A firm establishes its competitive building by investing scarce resources again and again in its value-added activities. By doing this the organizations will be able to give rise superior products and services that the buyer's desire and continue to grow the business and adhere to its strategic plan once implemented.
A strategy which is adopted by an organisation indicates what area the firm intends to do well in.