A definition of strategy has been provided by a man named Michael Porter who is in fact one of the leading experts in the field of cost leadership and differentiation strategies and has created a model of generic strategies in 1980. His model is viewed as one of the most important assets to strategic management (Minarik, 2007). Strategy is made up of unique and valuable position. Porter describes strategic positioning as a way for a company to choose activities which are profitable due to the differences from what the rivals may or may not do. One company which is a leader in this is IBM. Many would not associate IBM with a consulting company; however IBM has one of the largest Strategy and Change consulting practice and is recognized globally …show more content…
To remain competitive and head of rivals it chooses to take a low cost approach to an entry-level storage server which costs consumers about a third of the competitors costs (Boulton, (2004). One of IBMs greatest assets though is its consulting service. IBM is constantly redefining its approach to business through its consulting service and through the use of leadership. According to Berman and Korsten identifying major breakthrough opportunities for any company is hard because of the risk it involves or brings to that company (Berman and Korsten, n.d.). Corporate planning generally goes about looking at existing strengths and weakness; however it is important to go beyond this. Low cost and differentiation strategy focuses on a few areas such as 1.Cost leadership, 2.Differentiation, and 3.Focus (Minarik, (2007). Using the low cost approach in the area of entry-level storage server differentiated IBM from the competitor by creating a low cost product which created a larger market for IBM even …show more content…
IBM had to come up with a system smart enough to help the world work smarter (JVBL, 2011). IBM is founded on the computer and technology field; however 20% of services are dedicated to the manufacturing of its hardware; while the rest of its devotion went into the consulting of the computer and technology fields. In a time when the world was going through big changes in how the world lived, IBM came up with a system which helped the world function smarter. In every program IBM offers there is one similar characteristic, IBM’s signature SMART programs; are a imitative thereof - typically precedes the name of the specific consulting program involved (JVBL, 2011). IBM showed the world how to better live through methods of their own such as waste reduction within the company. This program cut the waste throughout the company by 44% in five years and was a major signal to other
anybody can do? IBM has taken on the leader of software with an innovative new
Porter (1997) suggests in order to gain competitive advantages in the changing business environment, it is essential to design a generic strategy for the business: product differentiation or cost leadership. The competitive strategy is determined at round 2, when recognised our rivals held whole product profile which was the product differentiation strategy. To differentiate our strategy from rivals for competitive advantages, Digby designed to imply the cost
Dess, G. G., Lumpkin, G. T., Eisner, A. B., & McNamara, G. (2012). Strategic Management: Text & Cases (6th Ed.). New York, NY: McGraw-Hill.
At IBM innovation is a very important thing. They are always looking for the next “Grand Challenge”. Generally this is done internally in the company. The projects aren’t created for the purpose of being commercialized. Their purpose is to put against each other humans and machines, and to inspire people to study, work and research in science.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
Porter, Michael E. "From competitive advantage to corporate strategy." Harvard Business Review (1987): 43-59. Print. May 2014.
Strategic management is the ongoing process of ensuring a competitively superior fit between the organization and its ever-changing environment (Kreitner, G13). Strategic management serves as the competitive edge for the entire management process. It effectively blends strategic planning, implementation, and control. Organizations that are guided by a coherent strategic framework tend to execute even the smallest details of their mission in a coordinated fashion. The strategic management process includes the formulation of a strategy/strategic plans, implementation of the strategy, and strategic control. A clear statement of the organizational mission serves as the focal point for the entire planning process. People inside and outside the organization are given a general idea of why the organization exists and where it is headed. Working from the mission statement, management formulates the organization's strategy, a general explanation of how the organization's mission is to be accomplished. Then general intentions are translated into more concrete and measurable plans, policies, and budget allocations. Implementation is the most important part of the strategy. Strategic plans must be filtered down to lower levels to be success. Strategic plans can go astray, but a formal control system helps keep strategic plans on track. In the strategic management process general managers who adopt a strategic management perspective appreciate that strategic plans require updating and fine-tuning as conditions change. Given today's competitive pressures, management cannot afford to let strategic plans sit as is. A strategic orientation encourages farsightedness. Sun Microsystems Inc. is one company that developed a strategy to become the competitive leader and become the most reliable in the net business. I will explain how Sun's strategy integrates their marketing, management, technology, and service functions into one effective strategy. First I'll discuss who Sun is and what encouraged them to develop their strategy.
Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2008). Crafting & executing strategy: The quest for competitive advantage (16th ed.). New York: McGraw-Hill Irwin.
Thompson, A.A., Strickland, A.J., & Gamble, J. E. (2010). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases: 2009 custom edition (17th ed.). New York: McGraw-Hill-Irwin
Both Porter and Miles and Snow’s strategy typologies are based on the concept of strategic equifinality, or the ability for firms to be successful via differing managerial strategies (Hambrick, 2003, p. 116). Porter 's strategy is more generic while Miles and Snow’s is more specific in nature. Porter’s generic strategy typology is based on economic factors centering on the source of a firm’s competitive advantage and the scope of a firm’s target market (González-Benito & Suárez-González, 2010). Porter’s typology emphasizes a firm’s cost, product differentiation or non-differentiation and market focus. When utilizing Porter’s strategy typology, a firm must first decide to target its products toward the mass market versus a market niche or focus. Secondly, a firm will determine if it wishes to minimize costs or differentiate its products with differentiation meaning that firms will most likely forego lower costs (Parnell, 2014, p. 184). This can lead a firm to develop a myriad of strategies between these options. Strategies which may have or not have focus, may or not be differentiated, may or not be low cost or any combination of strategies. In contrast to Porter, Miles and Snow’s typology is more specific in nature.
According to Doyle, (1983) positioning strategy refers to the selection of a marked market segment that shows all the customers a type of business that could seek out to serve and the option of choosing the differential advantage that explains the way it is going to compare against all its competitors in the same segment. It could be said from this definition that a positioning strategy applies mainly at a certain product’s level or/and service, working in the limits of a particular market and the fact that it should not really be mistaken with a wider concept of “corporate” strategy, or with any other concepts that are more specifically related to strategy such due to the fact that it could be related to every individual matter in the marketing mix, such as a “pricing” or “promotional” strategy.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 25-40.
If asked what strategic planning is one could interpret it as simply a road map that can guide the organization in the right direction. It is very unlikely that an organization would know which direction to take without a sense of direction. Managers are faced every day with decisions that have a major impact on the direction the organization must take, therefore, strategic planning can play an important role in guiding managers in the right direction. In other words strategic planning is a tool that management can use to give them a sense of direction that will guide them in doing a better job and to ensure that all the members of the organization are working toward the same goals
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
Strategy formulation is the process of establishing the firm's mission, goals, and choosing among alternative strategies or plans; it involves and implies that preparing the best approach to respond to the circumstances of a firm's environment, whether or not its conditions are known in advance; being strategic and tactical, then, means being clear about the management's aims; being aware of the company's resources, and incorporating both into being consciously responsive to a dynamic environment (SM, 2010). As nearly all businesses have limited resources, top leaders and management must determine which alternative plans or strategies will do well to the organization most; strategic management requires attention to the big picture and the motivation to adapt to circumstances, and consists of the following aspects: