As we impose the strategic positioning, we will begin by defining the strategy. Talk about the nature of the situation or strategic positioning, then also discuss the advantages of strategic planning.
What is the strategic position?
So, what is the strategy? It's a term we know, but so much like quality, we might have a hard time defining it. In our context, when we look at strategy we want to think about defining a company's position, making trade-offs and reconciling activities.
1. Principle #1 of determining the strategic position
So this first principle is geared towards defining the situation, in the context of thinking about value and unique activities, serving some of the needs of many customers may be an option. Serving the broad needs of a small number of clients may be an option.
In this context, we want to think of a company called HD Trade Services. This is a company from the University of Maryland that does a very unique solution.
They allow entrepreneurs to virtually see the products they order from the outside. So in that context, they have an individual next to the supplier with video cameras.
For products purchased by other people abroad, it can see online what is happening in the format of the quality check type so that you can monitor your own channel of distribution, you can actually see through the computer what the product looks like.
In Taiwan this is checked in the box if you are physically located as an entrepreneur in Maryland this is a very interesting solution.
They also do a variety of other stuff related to fulfillment management and they also handle some funding, they can be a source of holding dollars like an entrepreneur I can give them my money for and then, when I release the product from my supplier and do a proper check, that guarantee dollar can be released and given to the supplier.
So, they do a lot of things for suppliers, marketing, fulfillment, channel management, and financing.
However, there are relatively not many entrepreneurs who need such a solution so it may be a small group of individuals they serve with a wide range of needs.
See: 4 Changes that Increase the Chances of New Projects
2. Principle #2 determining the strategic position
The second element we want to think about is the trade-offs and a big part of entrepreneurship is deciding what you're not going to do. You can't be everything to everyone as an entrepreneur.
It's too expensive, it's too expensive to market, and it's very stressful and confusing to have a single message for your market. So we want to focus on developing solutions and building a brand, that is meaningful, consistent and has a clear purpose.
What this means is that we want to emphasize serving one market initially and explore growth opportunities later.
We don't want to come into the market and try to be everything to everyone, we want to start by doing one thing that does well building a brand reputation in investing our marketing money in it.
Since we have achieved success and growth, we can develop and dive into other markets and new opportunities.
 |
| An image showing the development of Amazon |
Amazon is a great example of this, Amazon didn't start selling what they sell today. At first it was just books, and the rationale was to let us sell books at a relatively low price where people knew exactly what they were going to get because the title and author of a book in a hard copy of a particular edition is the same regardless of its source.
And let's do something at our fingertips so on a day of non-free shipping we can't effectively sell dog food or furniture online but we can sell books and since we've done that we can get into the music.
And if you buy a CD, in 1998, by a certain artist with a certain title, you know exactly what that is no matter where you buy it from.
Various prices are still inexpensive $10, $15, shipping is very cheap. Over time they have evolved into consumer electronics, kitchen and beauty gadgets, computers, clothing, jewelry, shoes, etc., so even the great Amazon now didn't start doing everything.
They started by doing one thing well and gradually their product categories grew.
Uber is a formidable company, with tremendous success in the United States and abroad. They do one thing, they get people from A to B and they do it by car and that way they don't try to do the boats.
They're not trying to do planes, they're not trying to ride bikes. Arguably they could do these things but they focused on doing one simple thing and doing it well.
See: Knowledge Conditions in Understanding the Industry
3. Principle #3 determining the strategic position
The third element, strategic positioning, is the element of shaping convenience. The reason is, Walmart can be inexpensive because it has a minimal price tag for minimal service and minimal ambiance.
Don't go to Walmart and expect someone to have expert level knowledge about every product on the shelf. Don't go to Walmart expecting to be able to call them in advance tell them what you want they will pick it up for you and meet you when you arrive.
Well, there is the element of getting such personalized service from companies like Nordstrom and other premium retailers but it comes at a higher price that comes at a higher cost to the business and thus higher pricing to the consumer.
So what we want to realize here, is that you want to fit in between your activities. You want to have a competitive advantage, you want to be sustainable, but you also want all parts of your organization to fit together and to match your market and brand image with the product and service you offer to match the pricing you charge to match the operations you run and make them all connected.
So when we look at Nordstrom's, they consistently rank among the preferred and preferred retailer in customer service above all the rest in the US and they attribute it to this element of customer service that sets them apart from the other companies out there.
Strategic positioning reveals new opportunities
Strategic positioning should also reveal new opportunities for entrepreneurs. We want to think:
- What can we do that is not clear?
- What can we do creatively that includes insight?
- What can we do to discover unique functions?
And being strategic and thinking about opportunities that others may have missed.
Summary
Strategy is a big term but it really boils down to three things in the context of entrepreneurship. One is to think about where you can add value and do it uniquely.
Second, what should you not do? What will add unnecessary expenses? What will add confusion that you don't want? What will make you look like a competitor, when you want to be unique?