Five things to consider to optimize your position in the market.
Let me ask you: “What does ‘being strategic actually mean? And how is it relevant to you and your company?”
Not sure? It depends on the way you think and the things you think about.
It’s a must and essential. It doesn’t matter whether you’re managing a company with 50 employees or are the sole proprietor of a successful single-person (or woman) show, or when you’re working 9-5, and you’re looking to plan your escape. It’s always important to think ahead.
Strategic thinking is about considering the small number of elements that can make an impact on success and failure. This is why it’s crucial to be focused and think clearly about the few aspects that really matter.
Therefore, I’m going to outline five steps and five things to think about in order to become a better, strategically-minded person.
Step 1:
The first step to being able to take to become a strategic person is to comprehend the game you’re playing. This means you have to know the role of an Entrepreneur, what it means, how it shifts, and how it is related to organization, management and investment, business growth, and so on. You must also understand your part in that larger overall picture. This is step one.
2. The second stage
in the process is to gain insight into the unmet needs of your potential customers. What is the reason why knowing about not being met needs is so crucial? This is the reason. It is in order to enable you to expand your enterprise in the most efficient manner possible so that you can gain first-mover advantages and profit margins that are healthy.
The most important thing is to offer something that people don’t believe could substitute. This isn’t always straightforward; however, it is the ideal situation. If you examine companies that have the possibility of a large amount of substitution and you’ll not see extremely large profits.
Consider the case of McDonald’s. With its most direct competitor, Burger King, it is highly unlikely that McDonald’s business model will allow it to surpass its 7% return on investment as any price increase will force everyone to Burger King!
An alternative illustration is BMW as well as Mercedes. You’d think that these two companies enjoy very high margins of profit due to their high-end status and the price they are charging. However, they don’t just since luxury cars are interchangeable.
It is crucial to avoid the possibility of a situation like this.
There is only when there aren’t alternatives or when prospects believe there are no alternatives that a higher profit margin is achievable. The way to accomplish this is to position your company as a unique solution for your client’s needs that are unmet.
That’s just one reason why it’s crucial to move away from “chance” opportunities and instead enter the world of strategic opportunities and creativity. One only has to think about Cemex, Edward Jones, William Cook, ING, Zara, Amazon, Virgin, Lulu, E-Bay, and many others to understand what I’m talking about.
How can you set yourself up to meet the unmet requirements in a distinctive way?
Step 3:
This is the next step, knowing “your context” and then forming an attractive proposal.” Understanding your context involves knowing the market; being aware of your competition and what’s happening within your company, such as where your potential customers are gathered or gathering. The more you are aware of this, the simpler it will be to set yourself up so that you don’t have any alternatives. It is essential to be aware of the current events at all these places.
What is the process that leads to?
In the beginning, it gives you the ability to establish the essence of the industry you’re involved in.
It will assist you in determining your priorities in three areas: (1) your target customers, (2) the products and services that you believe are superior to others they will receive, and (3) an effective and distinctive method to provide the same in line with what customers want and what your company can do very well.
Three elements, if analyzed using creativity in the right context, can give you an edge over your competition.
Step 4:
The next step is to look at the reason for what you can do to increase your market share. What can you do to create better value – and lasting value to ensure your business is a superior option?
The act of offering customers something different and superior from competitors is, as we’ve discovered, an important factor in the development of a better strategy. However, is it enough? This question is a source of many crucial issues.
Twenty-five years in the past Direct Line introduced telephone-based insurance sales, which revolutionized the method of selling insurance throughout the UK. The majority of insurance companies copied telephone sales, and the benefits gained were only temporary.
What can we do to establish and create real and lasting differences that matter to consumers? There are several options. One is to choose and carry out activities that are different from competitors. The second is to choose tasks that differ from the activities of the competitors.
For instance, easy Jet’s strategic positioning as a short-haul “no-frills” low-cost service for tourists, business travelers, and students from Europe relies on an interlocking mechanism of the operations it undertakes to ensure its low-cost, convenient position. They include quick gates, regular departures using only a few aircraft, automated ticketing, self-selection of seat meals for a cost as well as low fuel and maintenance costs.
However, a full-service airline will perform activities to help a high-cost full-service program. They will offer customers options to fly to any number of destinations, using a greater variety of aircraft in addition to providing comfort and convenience, including meals on the flight as well as arranging connections to flights and even transferring and checking baggage.
So, while both airlines have effective and profitable business models, they’re constructed on completely different systems of interlocking processes and capabilities that are challenging to duplicate.
Where are we now? It’s important to know your game. You are aware of the needs of your potential customers that aren’t being met. You know the context of the market and your competition. You’ve considered your competitive edge. There is one more crucial factor to consider.
Step 5:
Not least, you need to consider the way you allocate your capabilities and resources. The choices you make regarding where and how to allocate the resources you have will decide how your company will get. This is what allows you to grow an impressive business even with the smallest resources.
Recognizing unmet requirements and a compelling proposition, as well as the ability to execute this effectively and with distinction, is not always the best way to create an innovative strategy. Another important aspect is the capabilities and competencies of a company, as well as the resources needed to make use of its potential.
Utilizing core competencies and capabilities is a must to continue to build innovative competitive advantage. Companies like Apple, Canon, Wal-Mart, and Tesco have been successful in competing in various markets due to their improved or acquired new resources and capabilities to develop new and superior products, enhance operations and build new capabilities faster or at a lower cost than their competitors.
If a plan is to be truly successful in its execution, it should reflect what the company is best at, not the things that competitors could perform similarly. In order to replicate a company’s strategic position, competitors will be required to copy not only the key functions of the company and methods but also how it executes them, or, in other words, the system of activity and the expertise needed in implementing it! This will create an increase in the quantity and quality of the resources needed by your company.
In the current world of technology, this is perhaps the most significant benefit you can get in your business.
In the end, you will only know the best way to allocate your resources once you have all the information you need to answer the remaining four questions. The reason you have a competitive advantage in the context of your market understanding of your competitors and what you’re doing. It’s the only chance it’s possible to occur. It’s impossible to assign your resources in a proper way without the other four measures in place.
Take a moment to consider these questions. What do you have to say to each? Which is the most effective allocation of your money?
If you can take these steps, you can answer these questions, and you’ll be on the way to establishing a successful business.
Andrew M. Pearson
Director
Coaching Business
Turning Good Businesses Into Unique Businesses
Andrew Pearson is a management coach who assists ambitious business leaders who want to grow their businesses.