Five Tests of a Good Corporate Strategy
1. A Unique Value Proposition Compared to Other Organizations
A distinctive mix of products or services to a defined set of customers. The company’s strategy must enable it to deliver a different value proposition, or set of benefits, from those offered by competitors. You want to answer the question: What value do they bring to the customer?
2. A Different, Tailored Value Chain
To establish a sustainable competitive advantage, a company must perform different activities or processes than rivals or perform similar activities or processes in different ways . You want to answer the question: What Does a company do to add additional features or services to add value?
3. Clear Trade-Offs
A sustainable strategy must involve “trade-offs.” The company must forgo some product features, services, or activities in order to be unique . You want to answer the questions: what does a company choose to do or not do compared to competitors?
4. Activities that Fit Together & Reinforce Each Other
An effective strategy involves fit across different activities in the value chain, so that the company’s activities are mutually reinforcing. The way a company’s product is designed, for example, can reinforce the efficiency of how it provides after –sale service. You want to answer the question: What other activities tie to other activities that lead to synergy or help each other?
5. Continuity over time
A sound strategy involves continuity of direction. A clear strategy makes change more rapid and effective . You want to answer the question: What does the company have or do that allows it to continue its success?
