Strategic Positioning - Essay Example

A company with the aim of increasing competitive advantage becomes operationally effective from its rivals and produces extreme level of economic value by gaining advantage of cost or price premium in a distinct way. Competition exists among the companies through the internet for operational effectiveness. A company needs to develop distinctive strategic path in an attempt to be one step forward in this highly competitive world. Before implementing strategy a company provides emphasis on profitability besides growth.

The company ought to improve its distinctive positioning even during the time of turmoil. The value chain needs to be highly integrated. A company needs to follow the six basic principles of strategic positioning with a view to maintain the distinctive positioning of strategy. The first principle is the ‘right goal’, which means higher return on long term investment. The economic value will be generated in sustained productivity as well as profitability by implementing strategy. The value of the economy is created when customer prices for the product exceed production cost.

In the second proposition, the strategy of the company enables to set ‘value proposition’ which is different from that of competitors. . This not only stimulates competitive advantage but make a strategy that is tough to replicate. The sixth or the last strategy is ‘continuity’ of direction; without it a company may not be able to develop distinctive skills and resources or create strong reputation with the customers (Michael Porter, 2001). Strategy positioning considers the industry structure of the organisation as a key independent variable in strategic analysis.

The effective performance of the industry is based on the ‘strategy fit’ of the firm. The strategist identified the three generic strategies such as differentiation, low cost and focus from which one that fits the industry structure will be selected. The templates supplied by five forces find out the attractiveness of an industry. The industry attractiveness is depended on the five forces including power of buyer, power of supplier, substitute’s threats, threat of new entrance and intensity of rivalry among incumbents as a result revenue will be high.

Strategy as ‘positioning’ balances both strategies as ‘planning’ as well as ‘SWOT’. It offered a technique that allowed in making accurate analysis of one of the key sections of the external environment of the industry (Business Strategy Review, 2003). 2.0 Criticisms The operational effectiveness associated with competition in a company leads to destructiveness and conflict for attrition. This will hinder the competition among the companies (Nirgudka, 2002). The models of Michael Porter are not valuable for strategy development and it has become useless tool from the manager’s tool box.

This model can be best suitable in companies with new and traditional technique of management. Michael Porter is of the opinion