DEFINING YOUR COMPETITIVE STRATEGY
answers to the following fundamental strategic questions will help
you define your competitive strategy.
“The answer to the
question, ‘What is our business?’ is the first responsibility
of top management. A business is defined by the want a customer
satisfies when he buys a product or service.”
Peter Drucker, Management- Tasks- Responsibilities-
What is the purpose of your business?
defines why your organization exists.
“To know what a
business is we have to start with its purpose.
Its purpose must lie outside of the business itself.
For in fact, it must lie in society since business
enterprise is an organ of society.
There is only one valid definition of business purpose:
to create a customer.”
Peter Drucker, Management.
What results are you trying to achieve to fulfill your purpose and
how will you measure success?
What value does your business create for its customers?
are your customers and where are they located?
What products and/or services do you provide those
customer need or problem do your products and/or services
satisfy or solve?
do your customers purchase your products and services rather
than a competitor's?
What is your business today?
For more insight on defining your business read Theodore
Levitt’s classic article entitled “Marketing Myopia”,
Harvard Business Review, July-August 1960.
YOUR SKILLS AND
are your core competencies?
Core competencies are points of
leverage for gaining competitive advantage. They are organizational competencies that are unique to your
organization or are
performed better than your competitors and make a
significant contribution to customer perceived value or create a
significant cost advantage.
organizations need many competencies covering a range of
functional activities (production, marketing, distribution,
a more thorough presentation on core competencies read Competing
for the Future by Gary Hamel and C.K. Prahalad.
your core competencies.
organizational competencies you have that enable you to
provide your products and/or services and compete in your
of these competencies are unique to you or do you perform
better than your competitors?
of these competencies create customer perceived value
throughout your product line or give you a significant cost
advantage over your competitors?
Include the organizational competencies that provide the product characteristics, service attributes,
and intangible features that
convince your customers' to purchase your product or service rather than a competitor's.
listed in these last two categories are your present core competencies and can be your focal
point for attaining competitive advantage.
What should your business be tomorrow?
Notes: This website
provides a model to help you think through your business
theory and examine the assumptions upon which it is based (www.threesigma.com/businesstheory_model).
answers to these previous questions define your
SIZE AND MARKET STANDING:
How large do you need to be?
Organizations must be large enough to avoid becoming a marginal
player in the marketplace and to maintain a reasonable balance
among their operating functions.
sales volume and revenue will provide your required
facilities, equipment, and personnel are needed to achieve
This website (www.threesigma.com/profit_planning)
provides a model to help you determine your profit requirements.
What are your goals and how do you measure them?
your vision usually requires accomplishing results in a variety of
areas. Goals provide
the mechanism to specify the set of results that will define
vision achievement. In
this way goals clarify and focus your vision.
To accomplish this clarity and focus goals need to describe
the operating, financial, social, and other conditions you must
bring about to achieve your vision. Effective goal setting includes defining how goal
achievement will be measured. Effective goal setting includes defining how goal
achievement will be measured.
This means identifying the indicator or indicators that
will be used and the quantitative or qualitative value of these
indicators that will define goal achievement.
the goals that describe the results you want to achieve.
indicators will you use to measure goal performance.
the quantitative or qualitative values of these indicators
that will define goal achievement?
answers to these questions clarify your organizational vision and
define the results you are committed to achieve.
What are the barriers you must
overcome to achieve these goals?
systems obstacles that impede the attainment of your goals.
This website (www.threesigma.com/mission_operational)
provides a model to help you clarify
your mission, define your goals and identify barriers to
What strategic approach are you using to overcome these
Your strategic approach defines how you intend to deal with
the barriers to goal achievement.
offensive strategy will work if some key barriers can be
overcome, altered, or neutralized by the application of
resources that are available to you.
guerilla strategy will work if key barriers can be
circumvented, minimized, or eliminated by narrowing the scope
of your operations.
defensive strategy is called for when none of the above
conditions are met.
the strategic approach you will use (offensive, defensive, or
niche) and the tactics you employ or will employ to achieve
APPROACH TO COMPETITIVE ADVANTAGE:
What is your approach to
competitive advantage and the market scope in which you compete?
FOCUS FOR GROWTH:
What is your focus for growth?
What is your primary method of growth?
What is the scope of your products, services, and markets?
of Products and
Focus on current markets
Develop new markets
on current products and services
penetration of current markets
new markets for current products and services
Develop new products and services
new products or services for current markets
new products or services and new markets
your product and market focus in the following matrix.
Indicate the current products or services and market
segments that are targeted for increased penetration.
Indicate the new market segments that are being developed
and the current products or services that are being expanded
Indicate the new products or services that are being
developed and the current market segments being targeted.
Indicate the new products or services that are being
developed and the new markets that are being developed for
What are your product and market priorities?
market segments have the highest priority and what
products/services do you offer to these segments?
market segments and/or products receive routine priority?
market segments and/or products receive reduced resources
market segments and/or products are being abandoned?
market segments and/or products are being developed for the