The Positioning School of Strategy Formation
The Positioning School of Strategy Formation is one of the ten schools of thought on strategy formation proposed by Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel in their book "Strategy Safari." This school focuses on the idea that strategy positions the organization effectively within the industry or market. According to the Positioning School, strategy formation is an analytical process in which organizations identify attractive market segments, analyze competitive forces, and choose strategic positions with the best chances of success.
Purpose: The main purpose of the Positioning School of Strategy Formation is to emphasize the importance of competitive positioning in shaping an organization's strategy. This school promotes that successful strategies are largely determined by the organization's ability to find and occupy favorable positions within its industry or market.
Role: The role of the Positioning School is to provide a perspective on strategy formation that highlights the importance of competitive positioning and market analysis. It offers a contrasting view to other schools of thought, such as the Learning School or the Design School, which focus more on the internal dynamics of the organization or the iterative process of strategy formation. The Positioning School underscores the importance of understanding and analyzing the competitive landscape to develop effective strategies.
Components: The Positioning School of Strategy Formation comprises several key components:
- Competitive positioning: A focus on the organization's position within its industry or market, recognizing that strategic success is largely determined by its ability to occupy favorable positions relative to its competitors.
- Market analysis: Organizations must analyze their market, including customer segments, competitors, and industry trends, to identify attractive positions and develop successful strategies.
- Analytical approach: The emphasis on strategy formation as an analytical process in which organizations use data, frameworks, and tools, such as Porter's Five Forces or the Boston Consulting Group (BCG) Matrix, to analyze their competitive environment and make informed strategic choices.
Importance: The Positioning School of Strategy Formation is important because it highlights the role of competitive positioning and market analysis in shaping strategy. By emphasizing the importance of understanding the competitive landscape, the Positioning School can help organizations develop more effective strategies that align with their market context and offer the best chances of success.
History: The Positioning School of Strategy Formation emerged in the 1980s with the publication of Michael Porter's influential book "Competitive Strategy," which introduced the concept of competitive positioning and popularized tools such as Porter's Five Forces. It was later proposed as one of the ten schools of thought on strategy formation by Mintzberg, Ahlstrand, and Lampel in their book "Strategy Safari," published in 1998.
- Focus on competitive advantage: The Positioning School promotes the idea that organizations must seek and maintain competitive advantage through effective positioning, helping them to develop strategies that are more likely to be successful in the long term.
- Enhanced understanding of the competitive landscape: By emphasizing the importance of market analysis, the Positioning School encourages organizations to develop a deeper understanding of their competitive environment, which can inform more effective strategic decision-making.
- Analytical rigor: The Positioning School's focus on analytical tools and frameworks can help organizations to make more informed and rational strategic choices, promoting more effective and robust strategies.
Pros and cons:
- Highlights the importance of competitive positioning and market analysis in shaping strategy.
- Encourages organizations to develop a deeper understanding of their competitive environment.
- Promotes the use of analytical tools and frameworks to support strategic decision-making.
- May underestimate the importance of internal factors, such as organizational capabilities, culture, and resources, in shaping strategy.
- Can lead to an overemphasis on analysis, potentially limiting the organization's ability to respond to environmental changes or pursue innovative strategies.
- May not be suitable for all organizations or situations, particularly those operating in highly uncertain or rapidly changing environments, where a more flexible or adaptive approach to strategy formation might be required.
Examples to illustrate key concepts:
- A car manufacturer identifies a growing demand for electric vehicles and analyzes the competitive landscape, including competitors, customer segments, and industry trends. Based on this analysis, the company decides to invest heavily in developing electric vehicle technology and repositioning itself as a leader in the electric vehicle market. In this example, the Positioning School's emphasis on competitive positioning and market analysis helps the company develop an effective strategy that capitalizes on emerging market opportunities.
- A software company operating in a highly competitive industry uses Porter's Five Forces framework to analyze its competitive environment, identifying areas where it can differentiate itself from competitors and gain a competitive advantage. By focusing on a niche market segment and offering specialized solutions tailored to the needs of its customers, the company is able to establish a strong position within its industry. In this case, the Positioning School's focus on analytical tools and frameworks helps the organization develop a more effective strategy.
In conclusion, the Positioning School of Strategy Formation is a perspective that emphasizes the importance of competitive positioning and market analysis in shaping an organization's strategy. While this school offers valuable insights into the role of competitive positioning and the importance of market analysis, it may not be suitable for all organizations or situations, particularly those that require a more flexible, adaptive, or internally-focused approach to strategy formation. The Positioning School's strengths, such as its emphasis on competitive positioning and analytical rigor, should be considered alongside its limitations, such as its potential underestimation of internal factors and the risk of overemphasizing analysis. However, for many organizations operating in competitive industries, the Positioning School's focus on competitive positioning and market analysis can provide a valuable foundation for effective strategy development.