What is Strategy?

Question 1

What are the unfounded criticisms of Strategic Positioning these days?

Answer 1

1. It is static for today’s dynamic markets and changing technologies
2. Easily copies
3. Competitive advantage is temporary.

Question 2

What is the basic unit of competitive advantage?

Answer 2

Activities

Question 3

What is operational effectiveness?

Answer 3

It means performing similar activities better than rivals perform them. Be more efficient and better utilize inputs.

Question 4

What is strategic positioning?

Answer 4

It means performing different activities than rivals or performing them in a different way to achieve sustainable competitive advantage.

Question 5

Competitive convergence is

Answer 5

when company’s become indistinguishable from one another due to extreme competition and bench-marking.

Question 6

List the three key principles underlying strategic positioning!

Answer 6

1. Strategy is the creation of a unique and valuable position, involving a different set of activities,
2. Strategy requires making trade-offs in competing–to chose what not to do.
3. Strategy involves creating “fit” among the different company activities.

Question 7

Strategic positioning emerge from three sources:

Answer 7

1. Variety-based positioning– serving few needs of many customers,
2. Need-based positioning– serving broad needs of few customers,
3. Access-based positioning– serving the broad needs of many customers in a narrow market.

Question 8

Why does new entrants have an edge in finding a strategic position?

Answer 8

1. They can discover unique positioning that have been overlooked by established competitors,
2. Entrants (coming from other industries) can create new positions because of distinctive activities drawn from their other business,
3. Can fill new positions that opened up due to change.

Question 9

What are the ways that incumbents try to imitate strategy?

Answer 9

1. Repositioning themselves,

2. Straddling–combine new position with an old one.

Question 10

Trade-offs occur when…

Answer 10

1. activities are incompatible,

2.

Question 11

Three reasons trade-off arises from

Answer 11

1. Inconsistencies in image and reputation,
2. the activities themselves (logistics and configuration problems),
3. limits on internal coordination and control.

Question 12

How does “fit” lock out imitators?

Answer 12

by creating a chain of activities that is as strong as its strongest link

Question 13

What are the three types of fit?

Answer 13

1. simple consistency between activities and strategy,
2. occurs when activities reinforce each other,
3. occurs when there is optimization of effort.

Question 14

Why is it hard to imitate high-order fit?

Answer 14

1. It is difficult to untangle the system from outside and therefore hard to imitate,
2. Imitators gain little from imitating part of the system rather than the whole,
3. fit creates a pressure and incentive to improve operational effectiveness, thus making it harder to imitate.

Question 15

meaning of vis-a-vis:

Answer 15

in relation to, in regards to

Question 16

What are the main elements of sustainable competitive advantage, as it is compared to the implicit strategy model of the past decade:

Answer 16

1. Unique competitive advantage for the company,
2. Activities tailored to strategy,
3. Clear trade-offs and choices vis-a-vis competitors,
4. Competitive advantage arises from fit across activities,
5. Sustainability comes from the activity system, not the parts,
6. Operational Effectiveness is a given.