Determining how your organization will compete
Using strategic planning in conjunction with your annual business planning takes your organization to the next level. It incorporates your vision for the future and allows you to “think outside the box.”
While an effective strategic plan includes varied objectives, one component that cannot be overlooked is determining how your organization will compete most effectively in the marketplace. Clearly defining your organization’s strategy ultimately creates a unique advantage to surpass your competitors.
Michael Porter described the following strategies:
Low-cost
Many companies choose to offer the least expensive product in order to sell more than their competitors. Selling the lowest cost product or service is one method for success.
Differentiation
This approach is similar to the low-cost option, but the focus is on differentiating your service or product in other ways that make it better and more desirable to your customers. As a result, you’re able to charge a higher price.
Focus
A company can also select a particular scope for its products – either focus (providing its products to selected market segments) or industry-wide (offering its product across many areas in the market).
Distinguishing your organization
Michael Treacy and Fred Wiersema later identified three “value disciplines” that can provide a competitive advantage and create customer value. They described the following ways in which a company can distinguish itself: operational excellence, product leadership, and customer intimacy.
Operational excellence
Does your organization operate with excellence? This focus is on providing reasonable quality at a very low price through superior operations and execution. UPS, the shipping company, is known for its excellence related to logistics. Companies focus on efficiency and streamlining their operations.
Product leadership
Is your organization a “product leader”? Companies with strong product leadership focus have powerful innovation and brand marketing. Apple, the legendary technology product company, is an example of an innovative product company. They place a heavy emphasis on design, time-to-market, and high margins in a short time frame.
Customer intimacy
How “customer intimate” is your organization? These companies succeed based on their great customer attention and service. Nordstrom, the well-know retailer, is known for their outstanding customer service. They tailor their products and services to individual clients with a focus on exceeding their expectations. str
Wrapping it all up
While all of these strategies can be formidable components in the effort to distinguish your organization from its competitors, it is important to select one approach to excel. Aim for average to above average in several other areas, and recognize that choosing your focus will boost your odds of success in becoming a serious contender in the marketplace.
