SMM 4.1

• Strategy


  The general principles of creating and sustaining competitive advantage
• Strategy


  Deliberately choosing a different set of activities to deliver a unique mix of value
• If all rivals produce the same way, distribute the same way, service the same way, and so on, they are, in Porter's terms, competing to be the best, and not competing on strategy
• Strategy tests


  • Distinctive Value Proposition
  • Tailored Value Chain
  • Trade-offs
  • Fit Across Value Chain
  • Continuity Over Time
• Value Proposition


  The answer to three fundamental questions: Which customers are you going to serve? Which needs are you going to meet? What relative price will provide acceptable value for customers and acceptable profitability for the company?
• Value Proposition


  Looks outward at customers, at the demand side of the business
• Value Chain


  Focuses internally on operations
• Strategy is fundamentally integrative, bringing the demand and supply sides together
• Robust strategy needs a tailored value chain (supply side), Unique configuration of activities that delivers value
• Strategy links choices on demand side with unique choices on the value chain
• Competitive advantage requires both a unique value proposition and a tailored value chain
• Value proposition


  Different businesses have different ways of presenting their value to customers
• Strategy is about having a unique value proposition compared to competitors
• Tailored Value Chain


  Performing activities differently or performing different activities compared to rivals to match the value proposition
• Building and maintaining competitive advantage requires discipline in rejecting initiatives that would dilute uniqueness
• Trade-offs are necessary in competing effectively, which means not giving every customer what they want
• Strategic trade-offs involve deliberately making some customers unhappy to better serve others
• Trade-offs are essential in making strategies unique and sustaining them over time
• Innovations can sometimes break traditional trade-offs, leading to lower costs and improved performance
• Once companies achieve operational parity, real trade-offs emerge when adding quality features
• Fit


  How activities in the value chain relate to each other
• Fit amplifies the competitive advantage of a strategy by lowering costs or raising customer value</b>
• Fit also makes a strategy more sustainable by raising barriers to imitation
• Achieving fit involves aligning various functional areas within a business, which can be challenging
• Continuity over time


  Crucial for building and sustaining competitive advantage
• Continuity helps suppliers, distributors, and other partners understand your strategy and contribute effectively
• By focusing on consistent improvement within your strategy, you develop unique skills and capabilities tailored to your specific approach
• Copying a successful strategy is hard. Each activity needs to be done well, and frequent changes disrupt this process
• Shifts in customer needs, regulatory changes, industry dynamics, and innovation can demand strategic repositioning
• Integrating new technologies into existing operations is vital for maintaining competitiveness in the value chain
• Continuous improvement is crucial: Stay on top of best practices in operational effectiveness, but ensure they align with your core strategy
• Balance efficiency with distinctiveness: Adopt best practices that don't compromise your unique value proposition
• Innovation fuels strategic advantage: Look for ways to improve or expand your value proposition for customers