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STRATEGY. There is confusion when distinguishing between Operational Effectiveness and Strategy. OPERATIONAL EFFECTIVENESS Performing similar activities than rivals but using practices allowing the company to better utilize its inputs,
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There is confusion when distinguishing between Operational Effectiveness and Strategy • OPERATIONAL EFFECTIVENESS • Performing similar activities than rivals but using practices allowing the company to better utilize its inputs, • PRODUCTIVITY FRONTIER– (LOWEST COST ATTAINABLE) The sum of all best practices at any given time. • Maximum value a company can create at a given cost, using best available: • Technologies • Skills • Management techniques • Purchased inputs • Constantly shifting due to new technology & management approaches • Constant improvement in OE is necessary to survive and profit, but it's not sufficient to COMPETE successfully in the long run.
Why ? Because the rapid diffusion of best practices allows competitors to quickly imitate techniques, technology etc. OEMs cynically and publicly benchmark competitors at BID time, sharing competitor offerings and improvements amongst all bidders thus making everybody a generic bidder. The common offering then becomes a homogeneous commodity at the lowest possible price. ' CONTINUOUS IMPROVEMENT ' programs by OEMs draw companies toward imitation and homogeneity. As we imitate one another, competition becomes a race down identical paths that no one can win. No improvement for anyone. The gains are captured by customers !! Competition based on PRICE alone is mutually destructive, leading to wars that can only be arrested by limiting competition: try to buy up the rival. RESULT: zero-sum competition, declining rates and pressure on costs prevent companies from investing in the business.
STRATEGIC POSITIONING: It’s all about being different • --Performing different activities from rivals or performing similar activities in different ways. • Create a unique & valuable position, involving a different set of activities. • Serving few needs of many customers -- needs based positioning • Serving broad needs of few customers -- needs based positioning • Serving broad needs of many customers in a narrowly defined segment -- needs based positioning • Variety based: offerings of a limited menu of services that can be performed with a noticeable distinctive difference. • Strategic Positioning Involves • 1.- Making trade-offs while competing: Choose what not to do, due to • Inconsistencies in image or reputation • Activities in themselves • Limits on internal coordination and control. • 2.- Creating a fit among company activities: the ways company activities combine and reinforce one another. • The success of a strategy depends on doing many things well and on the integration amongst them.
Strategy definition : The process of perceiving unique positions that would attract customers from established positions and/or draw new customers. DIFFERENTIATION IS THE essence of strategy, the prime source of competitive advantage by being different from your competitors in a manner that lets you serve your core customers better and more profitably. Operational Effectiveness (Lowest Cost) MUST BE A GIVEN.
Current Position What do our core customers see as our key sources of competitive differentiation? How do we know? Are these sources becoming more or less robust? A systematic approach to understanding our sources of differentiation is key to rectifying our situation. It enables us to have a meaningful discussion of what distinguishes each business unit from competitors and what we can build on. We may use these criteria while analyzing the individual business models: Are our differentiators (1) truly distinctive? (2) measurable against competitors? (3) relevant to what we deliver to our core customers? (4) mutually reinforcing?
STRATEGIC PRINCIPLE This distillation process should lead us to the magic phrase (Strategic Principle) that drives consistent strategic action individually at the business unit level and throughout the organization, while attracting customer’s preference: America Online Consumer connectivity first – anytime, anywhere Dell Be direct Southwest Airlines Meet customers short haul travel needs at fares competitive with the cost of automobile travel Wall-Mart Low prices, every day (EXAMPLES ONLY) AXIS One rate per VIN, end-to-end Logistics so visible that you’ll be promoted
$ 500 Best Business Unit Strategic Principle $ 1,000 Best definition of AXIS Strategic Principle Prizes will be awarded during our Follow-Up Strategy and Budget Meeting Scheduled for January 18-19, 2012. Entries will be received until January 17th.
COMMUNICATION OF STRATEGY The goal is to create a fully integrated marketing ecosystem that endlessly conveys the strategy to the desired customer audience. A fully integrated Customer Interaction set of programs: Consistent Sales Coverage + B2B web based programs + Market Intelligence. These programs will facilitate collaboration between the marketing, technology and sales teamsand will also provide data that will allow the effective management and operation of the whole business and its units. Data gathered will provide customer insight and intelligence that will help accurate and effective marketing and re-direction of strategy decision processes.
Strategy and Budget Meeting December 7-8, 2011 Southfield Michigan
Production COMPANY CONFIDENTIAL NOT FOR DISTRIBUTION
Production COMPANY CONFIDENTIAL NOT FOR DISTRIBUTION
Production COMPANY CONFIDENTIAL NOT FOR DISTRIBUTION
Production COMPANY CONFIDENTIAL NOT FOR DISTRIBUTION
