Strategy; It is a shared vision that unites a business, ensures that the decisions taken are consistent and that the business is on the right track. Strategy formulation consists of four basic steps:
The primary task represents the purpose of the firm—that is, what the firm does. At the same time, this primary task creates a competitive arena for the firm. The primary task should therefore not be narrowly defined. E.g; South Norfolk Railroads is a transportation company, not a railroad company. Paramount is a communications company, not a film production company.
While Amazon’s job is to provide the fastest, easiest and most enjoyable shopping experience, Disney’s job is to make people happy. The primary mission is often expressed as the mission of the firm.
The concept of vision, which defines where the business wants to see itself, brings this mission concept with it.
2) Evaluation of self abilities
Self ability; It refers to the work that a firm does better than other firms, that is, its distinctive abilities. The firm’s core competence may be dedicated service, good quality, fast delivery or low cost. While one company stands out in the market with its innovative designs, another may seek success in the market by offering better quality.
Self-capabilities based on experience, knowledge and application skills create sustainable competitive advantages. Therefore, products and technologies are unique core capabilities.
The advantages they provide are short-lived and can be easily acquired, imitated or improved by other companies. Core capabilities are more process-based and mean that a company has the ability to do certain things better than its competitors. If a custom product is not a core capability, it is a new product development process. E.g; Think of the Chaparral Steel company. Chaparral Management has given its competitors the opportunity to tour their factories whenever they want. Because it was thought that “They cannot take (the work we do best) to their own factories”. Although Chaparral was known for its low cost and high technology, his core talent was not technology but the ability to quickly transfer technology to new products and processes. Chaparral would have leveled up to something else if one of the competitors copied their current technology.
Core abilities are not static. They must be enlarged, enriched and developed over time. Close contacts with customers are essential to keeping a talent up-to-date.
3) Identifying order winners and order qualifiers: If what the firm does best is not important to the customer, it is very dangerous for the firm. For this reason, it is extremely important for the company to determine what influences customers’ purchasing decisions.
Order qualifiers are characteristics of a product or service that determine the customer’s decision to purchase. Order winners—the final factor in the purchasing decision—are the characteristics of the product or service that obtains orders in the market. E.g; When purchasing a CD player, customers can set the price margin (order qualifier), then select the best featured (order qualifier) product within that specified price margin. Or customers may have a lot of features in mind (order qualifier) and choose the cheapest CD player (order qualifier) that includes all the required features.
Just as core abilities are gained or lost, order earners and order qualifiers can change over time. While Japanese automakers competed on price at first, they later had to provide a certain level of quality in order to attract the attention of the American consumer to their products. Over time, consumers have paid more to get premium Japanese vehicles. While price is a qualifier, quality is an order earner. Today, a high quality qualifier, which is a standard of the automotive industry; Innovative designs, on the other hand, bring order.
It is very important for a company to meet the order qualifiers and to be at the top level in order winning. Ideally, the firm’s distinctive ability should meet the market’s order winners. If the firm’s distinctive ability does not meet the market’s order earners, it should be targeted that a portion of the market be closely related to the firm’s expertise. Otherwise, the firm should begin to develop additional capabilities that are more aligned with market requirements.
- Positioning the firm: No firm can provide all the essentials for everyone. Strategic positioning consists of focusing on one or two important things and making the choice to optimize them. The firm’s positioning strategy determines how to compete in the market where unique value will be delivered to the customer. An effective positioning strategy considers the strengths and weaknesses of the business, the needs of the market, and the positions of competitors.