A strategy is a much broader term than you would think. Hundreds of models within the Strategic Marketing field have attempted to explain and analyze the strategic decisions of a business. Yet, only a few of them stopped to consider the organizational areas that compromise a strategy, and how these fit together to form a clearly-defined business strategy. One of these models is Hambrick and Fredrickson’s Strategy Diamond, which puts forwards five main areas that will help you identify what a strategy really is, and how its formulation can help your business attain and sustain a competitive advantage.
The first step to a successful strategy is to identify your territory. In which geographical markets are you going to compete in? Which channels are you going to use to reach your target audience? Which technologies are you going to use? Which markets do you wish to enter? These are only some examples of questions that need to be asked in order to gain a deeper understanding of where your business is standing.
Having identified your arena, the next factor that needs to question that needs to be asked is how you will get there. Here, you will need to assess your options when it comes to in-house development vs outsourcing. What is the most cost-effective option? Which one will yield the greatest profits and which one has the greatest potential for the future? You will also need to consider alliances, partnerships, ventures, acquisitions, and franchising.
Another main point to consider is your Unique Selling Proposition (USP). What makes you stand out from the market? How can you differentiate yourself from the rest? Some of the most common factors you might consider building upon are:
- Quality (e.g. reliability, durability, longevity, etc)
- Brand image
- Customer Service (e.g. after sales service, guarantee, warranty, etc)
Rome wasn’t built in one day. This is something you will need to have in mind when planning the sequence and steps of your strategic moves. You will first need to set strong foundations, and then slowly build your way up to the top. If you risk going too fast before the company is mature enough to handle the changes, then you are putting yourself in real danger. Remember that in order to succeed you need to progress step-by-step.
5. Economic Logic
Economic Logic is the last piece of the puzzle. This is where all areas previously discussed fit together in order to create an integrated strategy. In a nutshell, this section puts forward the strategic options a business may pursue in order to generate the expected profits, including low-cost pricing, premium pricing or a combination of the two. The choice will depend upon various factors such as the organizational resources and capabilities, the scale of business operations, the business experience and know-how, the market and industry, and the target audience.