CHAPTER 1. WHAT IS STRATEGY AND WHY IS IT IMPORTANT?
WHAT DO WE MEAN BY STRATEGY?
A company's strategy in management's action plan for competing successfully and operating profitability, based on an integrated array of considered choices.
A strategy stands a better chance of succeeding when it is predicated on action, business approaches, and competitive moves aimed at appealing to buyers in ways that set a company apart from rivals.
A company's strategy provides direction and guidance, in terms of not only what the company should do but also what it should not do. Knowing what not to do can be as important as knowing what to do, strategically.
STRATEGY AND QUEST FOR COMPETITIVE ADVANTAGE
The heart and soul of any strategy is the actions and moves in the marketplace that managers are taking to gain a competitive edge over rivals.
Competitive advantage comes from an ability to meet customer needs more effectively, with products or services that customers value more highly, or more efficiently, at a lower cost.
What makes a competitive advantage sustainable as opposed to temporary, are elements of the strategy that gives buyers lasting reasons to prefer a company's products or services over those of competitors.
Four of the most frequently used and dependable strategic approaches to setting a company apart from rival, buildings strong customer loyalty, and winning a competitive are:
1. Striving to be industry's low-cost provider, thereby aiming for a cost-base competitive advantage over rivals.
2. Outcompeting rivals on the basis of differentiating feature, such as higher quality, wider product selection, added performance, value added services, more attractive styling, and technological superiority.
3. Focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the special needs and tastes of buyers in the niche.