THE POSITIONING SCHOOL-STRATEGY FORMATION AS AN ANALYTICAL PROCESS

This was the dominant viewer of strategy formation in the 1980’s

It was given impetus especially by Michael Porter in 1980, following earlier work on strategy positioning in academe and in consulting, all proceeded by the long literature on military strategy, dating back to 500BC and that of Sun Tzu, author of the Art of War.

This view gives literal meaning to strategy and strategy reduces to generic positions selected through formalized analysis of industry situation hence planners become analysis.

OVERVIEW

OVERVIEW

The approaches embrace the saying

“Nothing but the Facts”

Realized Strategy•Calculate (Value than create or commit)

Intended Strategy

• Analyze

Optimal strategy for literal positioning of armies in battlefield

Segregate types of strategies and match to most suitable conditions

Imperative Imperatives and hence MAXIMS. E.g. ‘Subdue enemy without fighting’

Sun Tzu: Study of Enemy and Positioning of army Strategy involves many calculations feeding off one

another and less calculations means less chance of success.

Von: Strategy is open-ended, creative, contradictory as it requires discipline yet feeds off all members involved.

FIRST WAVE: Military School

THE SECOND WAVE: THE SEARCH FOR CONSULTING IMPERATIVES

BOSTON CONSULTING GROUP

BCG: THE GROWTH SHARE MATIX

HIGH

LOW

CURRENT MARKET SHARE

EXPERIENCE CURVE CONCEPT

THE THIRD WAVE: THE DEVELOPMENT OF EMPIRICAL PROPOSITIONS

Consisted of empirical search for relationships between external conditions and internal strategies

Porter’s COMPETETIVE STRATEGY proved a trigger for this wave He put basic approach of design school and applied it to industry COMPETETIVE ADVANTAGE consisted many of concepts, of

which, prominent were:

MODEL OF COMPETETIVE ANALYSIS

I. Threat of new entrants – Economies of scale, switching costs, etc.

II. Bargaining power of supplier – Concentration, differentiated inputs, etc.

III. Bargaining power of customer – Level of awareness, loyalty, etc.

IV. Threat of substitutes – Switching, buyer’s propensity to substitute, etc.

V. Intensity of rivalry amongst competing firms – Industry growth, product differentiation, etc.

THE THIRD WAVE: THE DEVELOPMENT OF EMPIRICAL PROPOSITIONS

GENERIC STRATEGIESA. COST LEADERSHIP – Via experience, economies of scale, etc.

B. DIFFERENTIATION – Via development of unique product, brand loyalty, etc.

C. FOCUS – For narrow market segments, differentiation focus (differential offerings in focal market) and cost leadership (low price in the focal market)

VALUE CHAIN

position school reasearch

Critique of the Positioning School Concerns about focus:

The positioning school’s focus has been described as being quite narrow by aiming mainly on the economic rather than the social and political.

The approach is not wrong, but the focus tend to be narrow. 

Concerns about contexts : The positioning school has a narrow context The positioning school is very bias towards traditional big

business. Bias toward the external condition, especially of industry

and competition.

Concerns about process :The message is not to get out there and learn, but to stay

home and calculate.

Concerns about strategies : Strategies have a narrow focus More of a generic positioning rather than a unique

perspective. At the limit, the process can reduce to a formula, whereby

such a position is selected from a restricted list of conditions. First mover advantage.

Contributions to the Field Its emphasis on analysis and calculation. Reduced its role from the formulation of strategy. Focus on hard facts. Shifting the role of planner to Analyst. The role of the positioning school is to support the strategy

making process rather than to be the process. Systematic way to the existing way of looking at strategy. Opened up avenues for research and provided various

effective concepts to be built upon. Finding ways to combine it with the views of the other school.

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