This document discusses key concepts from strategy, including operational effectiveness versus strategic positioning, types of strategic positioning, fit and sustainability, and the role of leadership. Some key points: - Operational effectiveness focuses on performing similar activities better than competitors, while strategic positioning means performing different activities or similar activities in different ways. - Strategic positioning relies on unique activities to deliver unique value and requires trade-offs in order to choose what not to do. - Fit among a company's activities is important for competitive advantage and sustainability, requiring consistency and reinforcement among activities. - Strong leadership is needed to define a clear strategy, make difficult choices and trade-offs, and provide discipline to implement the strategy.

1. WHAT IS
MOC studied by NIDA BUSINESS SCHOOL (FLEX’27)
MOC 2nd CHAPTER
STRATEGY
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CHAPTER2

2. Operational Effectiveness Is not STRATEGY
For almost 2 decade
• Learn to play by a new set of rule
• Flexible to respond rapidly to competitive and market change
Hyper-competition
• Self-inflicted wound
Root of problem
• Speed, Quality, productivity
and management tools
Positioning (The heart of strategy) is rejected
• Because it’s too static for dynamic market changing and
changing technology

3. Operational Effectiveness(OE) means
performing similar activities better than
rival perform them
Strategic positioning means performing
different activities from rivals or
performing similar activities in different
ways.
Non-pricebuyervaluedelivered
Relative cost position
high
high
low
low

4. STRATEGY rests on UNIQUE activities
Competitive strategy is about being different set of activities to deliver a
unique mix of value

5. The origin of strategic position
Variety-based positioning
• Choice of product or service varieties
Needs-based positioning
• Serving most or all the needs of a particular group of customers
Access-based positioning
• Segmenting customers who are accessible in different way.
However, positioning is not always a function of differences on the
demand or customer side. Variety and access positioning in particular, do not
rely on any customer difference
Strategy is the creation of a unique and valuable
position, involving a different set of activities.

6. A Sustainable Strategic Position Requires Trade-offs
Why do Trade-offs arise?
• Inconsistencies in image or reputation
• Trade offs within activities themselves
• Product features may be incompatible
“You cannot be everything for everyone by
having strategy, it means you have made a
decision to trade off one thing with another”
Michael E. Porter

7. Continental Airways
Tried to compete in two ways : to be low cost on
some routes and full service on others
Southwest Airways
Low-cost strategy
• No meal
• No seat assignment
• No interline baggage transfers
Strategy is making trade-offs in
competing
The essence of strategy is choosing
what not to do

8. Fit drives both Competitive Advantage and Sustainability
1. Simple Consistency
First-order fit is Simple consistency between each activity (function) and the overall strategy
Ex. Vanguard
2. Activities are reinforcing
Second-order fit occurs when activities are reinforcing
Ex. Neutrogena
3. Optimization of effort
Third-order fit goes beyond activity reinforcement
Ex. The Gap
Types of fit… How Fit work

9. “ ”
“ ”
FIT and SUSTAINABILITY
Strategyis creating fit among a company’s activities.
The success of a strategy depends on doing many things and integrating
among them. If there is no fit among activities, there is no distinctive
strategy and little sustainability.
Strategicfitamong many activities is fundamental not only
to competitive advantage but also to the sustainability of that
advantage

10. FAILURE TO CHOOSE
• Many companies and managers do not
understand need of strategy
• Imitating their competitor by flooded
business information
• Operating far from productivity frontier
• Pressured to deliver tangible and measurable
performance
• Pursuit of operational effectiveness

11. GROWTH TRAP
• Many managers tempted to incremental
growth but blur strategy
• Compromise in pursuit of growth is erode
competitive advantage
• Answer seen as revenue growth, but profit
decline

12. PROFITABLE GROWTH
• Concentrate in deepening a strategic position
- Deepening make distinctiveness,
strengthen fit and good communicate to
valued customer
- Extension the existing activity system,
that are feasible and rivals would find
impossible to match

13. ROLE OF LEADERSHIP
• Cleared strategy depend on strong leadership
- Leadership…
Making choice/ trade-off/ defining
and communicating company’s unique
position/ provide the discipline/ teach
lower level manager
• Manager must clearly distinguish
operational effectiveness from strategy

14. • Strategy renders choices about
- What not to do
- What to do
• However, a company’s choice of a new
position must be driven by the ability
into a sustainable advantage

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