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1. The Classic View of Strategy:
"Competitive strategy is a combination of goals for which the firm is
striving and the means by which it is seeking to get there.”
Goals
Objectives for profitability, growth,
market share, social responsiveness, etc.
Means
Target markets
Product lines
Marketing
Sales
Distribution
Manufacturing
Labor
Purchasing
Research and development
Finance and control
SOURCE: Competitive Strategy, Michael
Porter Free Press
Palm Computing
set the goal of creation and dominating a new market category called
“Personal Data Assistants” through technical innovation in display,
packaging and software applications.
The company chose the business professional as its target customer and
would sell to them through electronics retailers. There would be a total focus on low cost
manufacturing through the use of offshore suppliers. R&D would continue to focus on
inventing market-leading products focused on functionality which would be
useful to the mobile professional.
Competitive advantage would be sustained through market leadership. Above average profitability would be
achieved through premium pricing based on demonstrated value to the user and
through brand preference.
2. The Decision Based Definition of Strategy: "A business strategy is a set of dynamic, integrated decisions
which you must make in order to position your business in a complex
environment."
Decisions:
What business do we choose to be in?
How much growth potential?
What is the profit potential?
How do we enter this business?
What resources are required?
How do we gain competitive advantage?
How do we sustain competitive advantage?
How and when do we exit the current business?
Who are the right people to make it happen?
SOURCE: Business Sense by Dan Thomas
the Free Press
Palm
faced the challenge of sustaining its competitive advantage as imitators
emerged and, most importantly, the cell phone manufacturers like Nokia began to
incorporate the basic PDA functionality on the hand set.
Palm’s
strategic response was to split the company into two parts, forming PalmSource
and PalmOne. PalmSource sold the
Palm OS to other platform vendors such as Sony. PalmOne continued to produce innovative
hand-held devices which ran on the Palm OS. Increased access to funding to support
R&D and marketing lead Palm to its decision to merge with 3Com Corporation.
3.
The "Bottom-up Marketing” View of Strategy: Traditional strategy is top down, in other words,
decide what you want to do and figure out how to do it. An alternative is to find a tactic that
works and build a strategy around it.
Go down to the front lines, where the marketing battle is being fought. Where is the front? In the minds of your customers and your
prospects.
To build your strategy:
Monitor
the technology, customer, market, and competitor trends
Narrow
your focus to an intersection of a technology, customer, market, and
competition where there is opportunity to build and grow a business
Test
your strategy in advance with prospects, your sales force, and the press
Plan
and execute the launch strategy
Make
changes as needed on the fly to make the strategy work
Sell
your strategy
Get
enough resources
Keep
things on track
Sense
your success. Successful programs
usually start working from day one and vice versa
Pour
it on; go all out, rest is for losers
Cut
your loses, if it doesn't work, find another tactic and build it into the
strategy
When
in doubt, do something. Have a bias
for action
SOURCE: BOTTOM-UP MARKETING Ries and
Trout a Plume Book
The
split of Palm brought few buyers for the Palm OS and Palm One began to feel
pressure from software developers to support Windows CE, a more ubiquitous OS.
Market share was declining
The strategic response was to
rename the company “Palm,” refocus on innovations in hardware
design, and support Windows CE.