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THE POSITIONING SCHOOL-

STRATEGY FORMATION AS AN ANALYTICAL PROCESS


This was the dominant viewer of strategy formation
in the 1980s
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
GROWTH SHARE MATRIX
EXPERIENCE CURVE
BCG: THE GROWTH SHARE MATIX
*
STAR
?
PROBLEM
CHILD
$
CASH
FLOWS
X
DOGS
G
R
O
W
T
H



P
O
T
E
N
T
I
A
L


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
Porters 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, buyers 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 STRATEGIES
A. 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 schools 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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