How does the strategic trade-offs and fits in addition to the strategic positioning facilitate a firm to sustain its competitive advantage?

1. Ayesha Majid
RESEARCH BY AYESHA MAJID
SUSTAINING COMPETITIVE
ADVANTAGE OVER RIVALS
HOW DOES THE STRATEGIC TRADE-OFFS AND FITS IN ADDITION TO THE
STRATEGIC POSITIONING FACILITATE A FIRM TO SUSTAIN ITS COMPETITIVE
ADVANTAGE OVER RIVALS?

2. 1
HOW DOES THE STRATEGIC TRADE-OFFS AND FITS IN ADDITION TO THE STRATEGIC
POSITIONING FACILITATE A FIRM TO SUSTAIN ITS COMPETITIVE ADVANTAGE OVER
RIVALS?
INTRODUCTION
Strategy is a creation of unique and valuable position, involving a different set of activities. It
primarily involves three different elements i.e Strategic positioning, Strategic fit, and strategic
trade off. Strategy involves in choosing what to do or not as firms have scarce resources there
will be tradeoffs, as this drives strategy. Positioning choices determines not only which
activities a company will perform and how will it configure individual activities. Strategic
positioning consists of the core product and its uniqueness.
Strategy involves creating “fit” among a company’s activities. Fit has to do with how the
activities in the value chain interact and reinforce one another. Fit drives both competitive
advantage and sustainability: when activities mutually reinforce each other, competitors can’t
easily imitate them. When using the value chain as a framework, it’s important to remember
that all the activities in the chain are linked and interdependent. Positioning choices
determine not only what to do and how to do it, but also how everything fits together. While
operational effectiveness is about achieving excellence in each activity, strategy is
about combining activities.
You can enhance uniqueness and amplify trade-offs when activities combine to reinforce your
strategic position. If you make premium technology products, like Apple, you become even
more distinctive when you offer a sophisticated sales force and a marketing approach that
emphasizes specialized customer assistance and support.
According to Porter, a sustainable advantage cannot be guaranteed by simply choosing a
unique position, as competitors will imitate a valuable position in one of the two following
ways:
1. A competitor can choose to reposition itself to match the superior performer.
2. A competitor can seek to match the benefits of a successful position while maintaining
its existing position (known as straddling).
Thus, in order for a strategic position to be sustainable there must be trade-offs with other
positions. "A trade-off means that more of one thing necessitates less of another
There are three types of fit, which are not mutually exclusive:
1. First-order fit: Simple consistency between each activity (function) and the overall
strategy. Consistency ensures that the competitive advantages of activities cumulate
and do not erode or cancel themselves out. Further, consistency makes it easier to
communicate the strategy to customers, employees, and shareholders, and improves
implementation through single-mindedness in the corporation.
2. Second-order fit: Occurs when activities are reinforcing.
3. Third-order fit: Goes beyond activity reinforcement to what Porter refers to as
optimization of effort. Coordination and information exchange across activities to
eliminate redundancy and minimize wasted effort are the most basic types of effort
optimization.

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In all three types of fit, the whole matters more than any individual part. Competitive
advantage stems from the activities of the entire system. The fit among activities substantially
reduces cost or increases differentiation. Moreover, according to Porter, companies should
think in terms of themes that pervade many activities (i.e., low cost) instead of specifying
individual strengths, core competencies or critical resources, as strengths cut across many
functions, and one strength blends into others.
Strategic fit is fundamental not only to competitive advantage but also to the sustainability of
that advantage because it is harder for a competitor to match an array of interlocked activities
than it is merely to replicate an individual activity. Thus, "positions built on systems of
activities are far more sustainable than those built on individual activities”.
Strategic fit consists of decisions regarding resources and what to do and what not to do.
Sustainable competitive advantage can be achieved by combing strategic fit for e.g. Dell wants
to maintain low inventory and high customization as a result it makes most of its product on
order bases and does not keep any inventory with itself. strategic fit expresses the degree to
which an organization is matching its resources and capabilities with the opportunities in the
external environment and how a firm’s activities interact with and reinforce with one another.
Example of it would be Toyota as it offers a very strategically placed Supply chain that
operates accordingly with its function of assembling the cars. Thus, for creating a fit among
company’s activities. Another example is, Shan Foods sometimes aligns all of its activities with
a low-cost strategy since it is not very expensive and the masses can buy it. It also drives the
company’s competitive advantage and its sustainability.
Strategic fit is related to the Resource-based view of the firm which suggests that the key to
profitability is not only through positioning and industry selection but rather through an
internal focus which seeks to utilize the unique characteristics of the company's portfolio of
resources and capabilities. using a single sales force for all related products rather than
separate sales forces for each business, advertising related products rather than separate
sales forces for each business.
Fits has to do with the ways a company’s activities interact and reinforce one another e.g
Vanguard Group aligns all of its activities with a low-cost strategy. It distributes the funds
directly to consumers and minimizes portfolio turnover. Fits, hence derive competitive
advantage. Coming to tradeoff, some competitive activities are incompatible thus, gains in
one area can be achieved only at the expense of others. E.g. Neutrogena soap is positioned
more as medicinal product than a cleansing agent. Hence, all these three elements lead to
the formulation of a strategy that is then used for differentiating the strategy from
competitors and gain a sustainable competitive advantage. Telenor and Jazz are other
examples that have outperformed the market competitors. The three elements form the basis
of a strategy and since they all reinforce each other and work in accordance of each other,
the sustainable competitive advantage can only be gained strategy is based collectively on
them rather than just focusing on any individual element in particular.
Strategic trade off occurs when the activities of the firm are incompatible. It means that when
a company gains an advantage in one specific area it might gain disadvantage in the other
area. The strategic Fit involves the company’s activities as how much compatible they are and
add value to the final process.

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Lastly, Strategic tradeoffs are the decisions and directions in accordance with the fits and the
uniqueness, as mentioned earlier. Strategic tradeoff is very important because they are the
means to differentiate. If one company is taking advantage and lead through one of its
offering or specific function then the other company might be using any other means to
compete against it. Strategic trade provide the firms with unique positioning. For example,
Apple iPhone has been well known for its software and security and that is what they have
been working on in order to gain advantage over their competitors whereas Samsung has not
focused that much on its security but it provides the versatility and a very user oriented
software which enables its users to use various application.
In modern day these trade-offs and fits are actually a key to achieve the dual advantage such
as low cost and innovation, the speed of responsiveness.
Strategic position led by the operation effectives is a road towards achieving the right
competitive advantage. The decision making about the trade-off and achieving the right fit in
order to obtain and maintain operational effective is one dimension. Getting the on to the
right mark on the productivity frontier is the key to the ideal strategic positioning. A
sustainable strategic positing have its own trade trade-offs or we can say it require some
essential trade off, for this the firm need to choose the right fit. This process will help in
creating a differentiating factor which will lead to a new competitive advantage. Example; Big
companies like Toyota and Zara, which our involved in mass customization and getting the
supply chain advantage to reach the full competitive advantage.
Strategic focus is a common characteristic across successful organizations. Strategic focus is
seen when an organization is very clear about its mission and vision and has a coherent, well-
articulated strategy for achieving those. For example, when an insurance company specializes
in ‘crop insurance’ only or a bank has concentrated on ‘housebuilding loans’, we can say that
they are pursuing focus strategy.
Strategic positioning reflects choices a company makes about the kind of value it will create
and how that value will be created differently than rivals. Usually, with pricing positioning
strategy, a brand aims to be the cheapest or one of the cheapest in the market, and value
becomes their position. For example, Supermarket chains often have a house brand with very
low-price products in many product categories.
A sustainable strategic position requires trade-offs. Choosing a unique position, however, is
not enough to guarantee a sustainable advantage. But a strategic position is not sustainable
unless there are trade-offs with other positions. Trade-offs occurs when activities are
incompatible. Simply put, a trade-off means that more of one thing necessitates less of
another. An airline can choose to serve meals – adding cost and slowing turnaround time at
the gate – or it can choose not to, but it cannot do both without bearing major inefficiencies.
A valuable position will attract imitation by incumbents, who are likely to copy it in one of two
ways. First, a competitor can reposition itself to match the superior performer. J.C. Penney,
for instance, has been repositioning itself from a Sears clone to a more upscale, fashion-
oriented, soft-goods retailer.
A second and far more common type of imitation is straddling. The straddle seeks to match
the benefits of a successful position while maintaining its existing position. It grafts new

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features, services, or technologies onto the activities it already performs. Any airline can buy
the same planes, lease the gates, and match the menus and ticketing and baggage handling
services offered by other airlines.
Trade-offs creates the need for choice and protect against repositioners and straddlers.
Consider Neutrogena soap. Neutrogena Corporation’s variety-based positioning is built on a
“kind to the skin,” residue-free soap formulated for pH balance. With a large detail force
calling on dermatologists, Neutrogena’s marketing strategy looks more like a drug company’s
than a soap maker. It advertises in medical journals, sends direct mail to doctors, attends
medical conferences, and performs research at its own Skincare Institute. To reinforce its
positioning, Neutrogena originally focused its distribution on drugstores and avoided price
promotions.
Also, big companies such as Apple and Samsung are more aligned with their objectives only
because of the fact that they have achieved the strategic fit. They know what they are offering
and are continuously improving and innovating in that area.
Companies who lack synergy and do not have any ground are more likely to lose to their
competitors because they do not focus on one thing but rather are all over the place.
Starbucks is another example of a company who is doing well and is known all over the world
just because it has achieved a competitive advantage over other coffee shops by creating a
personalized environment where everyone feels included.
CONCLUSION
As we already know that strategy is when a firm establishes a unique and valuable position in
the market and its competitors. So, understandably when a firm opt for a strategic position
is also has to have certain trade-offs in which it must choose what to do and what not to do.
In order to provide quality services that are distinctly recognizable to the consumer the
organization has to decide on which one strategy it is going to pursue that is distinctly
different from the others. Thus, to position itself according to the Ansoff matrix the
organization may only pursue one strategy to facilitate its positioning and to differentiate it
from the strategy of its rivals. One example of such strategy is the strategy of companies like
apple. Apple does not simply adopt new and innovative technology until and unless it has
finessed over the technology in detail. For example, apple currently does not use the in display
finger print tech as all major players are doing simply because the tech is new. Thus apples
strategy is to make sure whatever it is providing to the consumer is of top quality and doing
that means trading off on which new tech apple will pursue and which tech it wont.
Some competitive activities are incompatible which is why gains in one area can be achieved
and the other area has to be forgone. An example is of Apple, when Apple chooses to make
highly innovative and expensive Iphone which only a certain type of market can afford to buy,
it very well knows that is has to trade-off the masses who cannot buy such an expensive
phone. But this is how Apple has positioned its products in the market. By contrast vivo
phones although innovative to some extent are still much cheaper and can usually be bought
by the masses because the price range is not as high as Apple’s Iphones. So, each company
has smartly positioned itself to create a strategic position and differentiate themselves
compared to rival brands.

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In order to make the strategic trade off a company must be able make judgements between
its choices and the no of resources it aims to require. Moreover, in order to achieve the fit, it
must be able to select the resources to sustain the competitive advantages.
Companies who achieve strategic fit and strategic positioning are more capable than their
rivals as they have a unique selling point that they can focus on and they are more able to
align their objectives and goals and have a smaller or no gap in what their brand promise is
and what they are selling. Jazz acquired Warid and have achieved a strategic fit by being the
top telecommunication network in the country, and this is exactly what one company should
do to make space for themselves in a highly competitive market they have to engage in
tradeoffs.