''Summary of What is strategy''

Submitted to
Prof.Bijaya K.C
Course Instructor
International Strategic Management

Submitted by
Pradipta Kafle

Januarry 3rd, 2016

South Asian Institute of Management
Kathmandu

What is Strategy? (Summary)

The definition of strategy nowadays is different to what it used to be. Positioning is too static
nowadays, any competitive advantage is temporary as competitors can copy it quite easily. The
article aims at redefining strategy by separating the term from operational effectiveness.
Operational effectiveness (OE) means performing similar activities better than rivals. Better
means more efficient, faster, and cheaper. It is necessary to achieve superior profitability.
However, while OE is necessary, it is not sufficient. It is not a strategy. A company needs to
establish a difference that it can preserve.
Strategy is about being different. Different in a way of choosing a different mix of activities to
provide a product or service. Strategic positions can emerge from three distinct sources which
serve as a basis for positioning:
1. Variety-based positioning: A company can specialize in a subset of an industrys product
(e.g. sell chairs only)
2. Needs-based positioning: A company can try to serve more needs of a target group than
rivals (e.g. not only sell chairs but furniture for the whole apartment)
3. Access-based positioning: A company can segment customers who are accessible in
different ways (e.g. only sell chairs in big cities, or via the internet).
A sustainable strategic position requires trade-offs. Trade-offs become necessary when two
activities are incompatible (e.g. you sell low-cost chairs while offering individual customer
service). Companies have to make sure that their activities are coherent. This implies refraining
from certain activities. Strategy is about choosing what not to do.
Another important aspect is how a company combines activities. By creating a fit among
activities, imitators cannot copy the business model as easy anymore. The three types of fit are
simple consistency (e.g. everything is low-cost); reinforcement (e.g. specific marketing
strategies); and optimization effect.
As we can see, strength of a company can result from a combination of activities. We can think of
themes (e.g. low-cost), which span across activities. Strategic fit is fundamental not only to the
competitive advantage, but also to the sustainability of that advantage.

The biggest threat to strategy is the desire to grow. Trade-offs set by the strategy seem to limit
growth. Trying to compete at numerous levels at once create confusion and undermine
organizational motivation and focus. The solution is to grow by deepening the strategic position.
This means making the activities even more distinctive, strengthening fit, and communicating the
strategy to new customers.