The five elements, or variants thereof, form the basis of all corporate strategy. In most cases, it’s best to narrow your attention to only one strategy to streamline execution. Combining these tactics increases the company’s chance of failure dramatically.
All of these tasks still require company execution. Yet, the strategic peak is where a firm’s primary competencies and the focus that most influences customers’ perceptions of the organization are located. The secondary strategy classes are relegated to supporting roles while the primary plan is implemented. A customer’s thoughts will, at best, get muddled if a business treats each of these equally. As per Anshoo Sethi, the worst-case scenario is where the client generates an unfavorable impression due to poor integration of the low-cost and technology strategies, leading them to believe they are receiving low-quality technology at a low price. Specifically, each tactic’s justification is as follows:
- Cost: The only way to secure an impregnable market position is to adopt a low-cost strategy. One of the most straightforward ways to set your products apart is through pricing. If the price is right, quality isn’t as important. An inferior product can outsell a better product if the price is right.
- Quality: There isn’t much of a learning curve between the cost approach and the quality plan. That’s why your perspective is entirely inward. Similar to the cost issue, this is an internal execution-only problem. The quality plan, however, is more challenging since it necessitates brilliant tactical execution across the board, from production to marketing to supplier partnerships. Outsourcing is incredibly challenging to put into action.
Excellent company procedures are the only way to ensure quality from the start. In addition, top quality-focused businesses always base their production in regions with robust work ethics and a long history of quality. The workforce plays a crucial role in any quality management plan. Because of this, Japanese firms have emerged as global leaders in quality management.
- Distribution: A company’s distribution system is a key component of its strategy. On the land, this tactic appears straightforward, yet it is anything but. This is not a method of distributing goods. As part of their distribution plans, many tech companies have established international connections. Implementing this method effectively is highly pricey. However, when carried out properly, the distribution strategy’s breadth creates formidable hurdles to entry.
- Technology: The technology strategy integrates technological and industrial innovation. Together, they create an unbeatable service or good. Since it eliminates the possibility of stacked margins, it typically generates the highest profits in the tech industry. However, it is additionally the trickiest to carry out. Producing this item in-house is necessary. The technological approach, which I depict as distinct from the intellectual property strategy, is a subtype of the ‘we’ll consider something’ strategy. This tactic is standard knowledge. The reason is obvious: your company is far more intelligent than its competitors. Only if your organization is continually innovative will the “we’ll think of something” tactics be successful.
- Intellectual property (IP): IP, or intellectual property, strategies are common among new businesses because they are similar to technology strategies but don’t require manufacturing. It’s the least expensive approach to break into a market but also the most risky company strategy since you’ll have no backup if you come up empty. In contrast to the technological approach, this one is based entirely on the “we’ll come up with something” principle.
There are several combinations possible with these methods. Anshoo Sethi says the value strategy is a popular example since it combines low prices with cutting-edge technology. An alternative is the “overlord” technique, which combines widespread deployment with modest overhead.