Strategies For Achieving Advantage


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Strategies For Achieving Advantage

  1. 1. Dr. Panos M.Pavlidis Strategies for Achieving Advantage POSITIONS SOURCES PERFORMANCE
  2. 2. Strategic Choices How can we gain new advantages? <ul><li>Do we have an advantage? Why? </li></ul><ul><ul><li>Target market? </li></ul></ul><ul><ul><li>Core value proposition? </li></ul></ul><ul><ul><li>Sources of advantage? </li></ul></ul><ul><li>How vulnerable is our position? </li></ul><ul><ul><li>Threat of imitation? </li></ul></ul><ul><ul><li>Threat of disruption? </li></ul></ul>STRATEGY = Integrated actions designed to achieve superior delivery of customer value
  3. 3. Achieving Superior Performance Positions of Advantage <ul><li>Best performance </li></ul><ul><li>Best price </li></ul><ul><li>Most complete solution </li></ul>Sources of Advantage <ul><li>Superior capabilities </li></ul><ul><li>Superior assets </li></ul><ul><li>Superior controls </li></ul>Performance Outcomes <ul><li>Satisfaction </li></ul><ul><li>Retention </li></ul><ul><li>Share </li></ul><ul><li>Profitability </li></ul>Key Success Factors Objectives for Growth and Profit Investing to Sustain Advantages
  4. 4. How Vanguard Gains a Competitive Advantage Positional Advantages Tight Cost Control Efficient Investment Approach Broad Array of Funds Direct Distribution Consistent Communi- cation Low rate of trading Bonuses tied to cost saving Frugal policies Index funds Discourage trading Wary of risky categories Education about risk Rely on word-of-mouth Clear buy-and-hold policy No retail outlets On-line access Negligible advertising No commissions to brokers Sources <ul><li>Lowest costs (expense ratio of 0.3% vs. 1.2% for competition) </li></ul><ul><li>Superior performance (Index Fund beat 86% of all stock funds) </li></ul><ul><li>Responsive service </li></ul><ul><li>Diversity of offerings </li></ul><ul><li>Credible information </li></ul>
  5. 5. Customer's Views of Value Leaders Operational Excellence Performance Leadership Customer Responsiveness &quot;A great deal&quot; &quot;Best price&quot; &quot;Trouble free basic service&quot; &quot;Always at cutting edge&quot; &quot;High price but worth it&quot; &quot;Constantly renewing and creative&quot; &quot;Really understand my business&quot; &quot;Exactly what I need&quot; “ Close business partner&quot;
  6. 6. Comparing Value Strategies Thrust of strategy Organization Core processes Economic driver <ul><li>Operational </li></ul><ul><li>Excellence </li></ul><ul><ul><li>Lowest delivered cost </li></ul></ul><ul><ul><li>Reliability/efficiency </li></ul></ul><ul><ul><li>Top down – employees more directed than enabled </li></ul></ul><ul><ul><li>Flat structure </li></ul></ul><ul><ul><li>Standardized </li></ul></ul><ul><ul><ul><li>logistics </li></ul></ul></ul><ul><ul><ul><li>manufacturing </li></ul></ul></ul><ul><ul><ul><li>fulfillment </li></ul></ul></ul><ul><ul><li>Scale </li></ul></ul><ul><li>Customer </li></ul><ul><li>Responsiveness </li></ul><ul><ul><li>Personalization </li></ul></ul><ul><ul><li>Complete solution </li></ul></ul><ul><ul><li>Infomediary </li></ul></ul><ul><ul><li>Front-line autonomy </li></ul></ul><ul><ul><li>“ Have it your way” mindset </li></ul></ul><ul><ul><li>Decisions based on fine-grained information </li></ul></ul><ul><ul><li>Modular operations </li></ul></ul><ul><ul><li>Integrated view of customer (CRM) </li></ul></ul><ul><ul><li>Service </li></ul></ul><ul><ul><li>Scope </li></ul></ul><ul><li>Performance </li></ul><ul><li>Superiority </li></ul><ul><ul><li>Innovative features </li></ul></ul><ul><ul><li>Greater functionality </li></ul></ul><ul><ul><li>Decentralized </li></ul></ul><ul><ul><li>Team-oriented/ loose-knit </li></ul></ul><ul><ul><li>Experimentation </li></ul></ul><ul><ul><li>Market sensing </li></ul></ul><ul><ul><li>Product development </li></ul></ul><ul><ul><li>Speed </li></ul></ul>
  7. 7. Assessing Advantage: What does our target market want? <ul><li>Who are our real customers? </li></ul><ul><li>How well do we know the decision-making unit? </li></ul><ul><ul><li>Owners </li></ul></ul><ul><ul><li>Influencers </li></ul></ul><ul><ul><li>Implementers </li></ul></ul><ul><li>What values are they seeking = which attributes are perceived as important? </li></ul><ul><li>What segment differences? </li></ul>
  8. 8. Assessing Advantage: What is our current position? <ul><li>Location on the value map? </li></ul><ul><li>Value = perceived benefits – perceived total </li></ul><ul><li> (life cycle) costs </li></ul><ul><li>How do we compare to the competition on each attribute? </li></ul><ul><li>Where do we fall short? Why? </li></ul>
  9. 9. Value Mapping for Copiers Total Costs <ul><li>Price </li></ul><ul><li>Service </li></ul><ul><li>Supplies </li></ul><ul><li>Inventory </li></ul><ul><li>Administration </li></ul>Total Benefits <ul><li>Product </li></ul><ul><li>customization </li></ul><ul><li>time in production </li></ul><ul><li>Service </li></ul><ul><li>technical support </li></ul><ul><li>responsiveness </li></ul><ul><li>quality </li></ul><ul><li>reliability (up-time) </li></ul>Worse Value Superior Value Parity Fair-value line Parity
  10. 10. Value Mapping - Kodak Copiers Target Segment: Desk Top Publishers Target Competitor: Xerox Competitive Position Net Position Benefits Relative Importance Behind Equal Ahead 1. Product Customization .18 .18 +.18 2. Time in Production .18 .06 .12 -.06 3. Finished Quality .12 .12 0 4. Reliability .12 .02 .08 .02 0 5. Technical Support .15 .10 .05 +.05 6. Responsiveness to Problems .15 .03 .10 .02 -.01 7. Reputation (brand equity) .10 .08 .02 +.02 Net position +.18
  11. 11. Making Strategic Choices <ul><li>Premises: </li></ul><ul><li>Superior profitability requires </li></ul><ul><ul><li>superiority on one value vector </li></ul></ul><ul><ul><li>parity on other two vectors </li></ul></ul><ul><li>Choice of value vector dictates </li></ul><ul><ul><li>choice of market segment </li></ul></ul><ul><ul><li>choice of business model </li></ul></ul><ul><li>Parity is a moving target </li></ul><ul><ul><li>best practices competition </li></ul></ul><ul><ul><li>rising customer expectations </li></ul></ul><ul><li>Importance of each vector varies with </li></ul><ul><ul><li>industry type </li></ul></ul><ul><ul><li>maturity of market/time </li></ul></ul>
  12. 12. Evolving Strategic Choices Introduction Growth Maturity Segment C Segment B Segment A <ul><li>Leader </li></ul>t 1 t 2 t 1 t 2 t 1 t 2
  13. 13. How First Direct Gained Advantage over High Street Banks Ability to retain and attract best people Business model Low employee turnover + Positive attitude High productivity Culture Service delivery capability Customer relating capability Location Selection Training Grouping Flexible hours Lower operating costs CRM systems Data- bases Customer understanding and selection Superior profitability Lower marketing costs High customer satisfaction and retention No branches 24 x 7 <ul><li>Superior </li></ul><ul><li>customer value </li></ul><ul><li>Service quality </li></ul><ul><li>Personalized </li></ul><ul><li>Lower prices </li></ul>