Strategic Choices

Determining where to compete, products/services to offer, how to differentiate.

Strategic Choices refer to the decisions and actions that an organization makes to achieve its long-term objectives and competitive advantage. These choices are fundamental to a company's strategic planning process and guide how it will navigate its competitive landscape. Three key aspects of strategic choices are:

• Determining Where to Compete:

  • This involves deciding in which markets, regions, or segments the organization will operate. It's essential to define the scope of your business and where you want to focus your efforts. Key considerations include market selection, geographical reach, and target customer segments. Organizations must assess which opportunities align with their core competencies and resources. Organizations need to consider their strengths and weaknesses, as well as the opportunities and threats in each market, when making these decisions.

• Products/Services to Offer:

  • This pertains to the range of products or services the organization will provide. It's about making choices regarding which offerings to develop, maintain, or phase out. The organization should decide what it can deliver effectively and efficiently. Organizations need to decide what products and services to offer that will meet the needs of their target customers and differentiate them from their competitors.

• How to Differentiate:

  • To stand out in the market, organizations need to decide how they will differentiate themselves from competitors. This involves making choices related to product features, branding, pricing, customer service, and overall value proposition. The goal is to create a unique and compelling position in the minds of customers.

Examples:

• Apple Inc.:

  • Determining Where to Compete: Apple operates in various markets, including smartphones, computers, wearables, and services. Its choice is to compete in premium segments and global markets, targeting consumers and professionals who value design and innovation.

  • Products/Services to Offer: Apple offers a range of products, including the iPhone, iPad, Mac, and Apple Watch, complemented by services like Apple Music and the App Store.

  • How to Differentiate: Apple differentiates itself through sleek design, user-friendly interfaces, and a strong ecosystem that integrates its hardware and software, creating a unique and seamless user experience.

• Amazon:

  • Determining Where to Compete: Amazon competes in a wide range of markets, from e-commerce and cloud computing to digital streaming and smart devices. It has a global presence and caters to diverse customer segments.

  • Products/Services to Offer: Amazon provides a vast selection of products through its e-commerce platform, cloud services through Amazon Web Services (AWS), and a growing array of digital content and devices.

  • How to Differentiate: Amazon differentiates itself by offering convenience, speed (e.g., Prime delivery), competitive pricing, and a strong emphasis on customer-centric services. It also leverages data-driven personalization to enhance the customer experience.

• Coca-Cola:

  • Determining Where to Compete: Coca-Cola operates globally in the non-alcoholic beverage industry, focusing on carbonated soft drinks, juices, and bottled water. Its market presence is extensive, with a presence in almost every country.

  • Products/Services to Offer: Coca-Cola offers a wide range of beverage products, including Coca-Cola, Diet Coke, Sprite, Fanta, and various fruit juices.

  • How to Differentiate: Coca-Cola differentiates itself through strong brand recognition, marketing campaigns, and its secret formula. It also diversifies its product portfolio by introducing new flavors and healthier beverage options.

• Southwest Airlines:

  • Determining Where to Compete: Southwest Airlines competes in the domestic airline industry, primarily in the United States. It focuses on providing low-cost, point-to-point air travel services.

  • Products/Services to Offer: Southwest Airlines offers short-haul, no-frills air travel services with a point-to-point route network.

  • How to Differentiate: Southwest differentiates itself by its no-change fees, affordable fares, quick turnaround times at airports, and a fun and friendly customer service culture.

• Nike:

  • Determining Where to Compete: Nike competes globally in the sportswear and athletic footwear industry. It targets athletes, fitness enthusiasts, and consumers interested in sports-related products.

  • Products/Services to Offer: Nike offers a wide range of athletic shoes, apparel, and accessories, covering various sports and activities.

  • How to Differentiate: Nike differentiates itself through innovative product designs, endorsements by elite athletes, and marketing campaigns that emphasize the "Just Do It" mentality. It also invests in sustainable and eco-friendly practices.

• Tesla:

  • Determining Where to Compete: Tesla operates in the electric vehicle (EV) and clean energy industry. It targets consumers looking for environmentally friendly and high-performance transportation solutions.

  • Products/Services to Offer: Tesla offers electric cars (e.g., Model 3, Model S), energy storage products (e.g., Powerwall), and solar energy solutions.

  • How to Differentiate: Tesla differentiates itself through cutting-edge EV technology, autonomous driving features, and its commitment to sustainability. It also creates a strong brand image through CEO Elon Musk's vision and the "Tesla experience" at its stores.

These choices underpin these organization's competitive strategies and contribute to their long-term success and market leadership.

For further reading, here are some key references on strategic choices and competitive positioning:

Books:

• "Competing for Advantage" by David E. Gumpert (Harvard Business Review Press) - Strategies for differentiation and achieving competitive advantage.

• "Playing to Win" by A.G. Lafley (Harvard Business Review Press) - Choosing where and how to compete to drive growth.

• "Blue Ocean Shift" by W. Chan Kim (Hachette Books) - Value innovation strategies.

Articles:

• "What is Strategy?" by Michael Porter (Harvard Business Review) - Positioning a company for competitive advantage.

• "How Competitive Forces Shape Strategy" by Joan Magretta (Harvard Business Review) - Insights on making strategic choices using Porter's Five Forces.

• "Strategy under Uncertainty" by Hugh Courtney, Jane Kirkland, and Patrick Viguerie (Harvard Business Review) - Strategies for uncertain environments.

Talks:

• "Focusing Your Strategy: Dominance, Innovation and Excellence" - Michael Porter at World Business Forum

• "Words Matter: Reimagining Strategy in the Age of Digital Disruption" - Roger Martin at Drucker Forum

The key sources above provide frameworks, examples and thought leadership on how companies formulate strategies based on competitive dynamics and market realities to sustainably grow profits and market share.

Sash Barige

Mar/01/2019

References:

• Strategic Management: Concepts and Cases by Arthur A. Thompson and A. J. Strickland

• Competitive Strategy: Theory and Cases by Michael E. Porter