Table of Contents
Corporate strategy is developed by the analysis of the industry environment in which they operate. They use the strengths and weaknesses of the competitors, thus, differentiating from these competitors. The company’s options of strategy are curved by the environment, which is the structural approach that shapes the strategy as the firm depends basically on the structural factors. The structural strategy can be reversed by the use of the blue ocean framework of strategy, the reconstruction’s approach that posits the ideas, and actions by which an individual player strategy is used to shape the structure. The reconstruction of the structural approaches of firms usually results in the sustainable performance.
The approaches of a firm are determined by three factors of the structural environment, resources, and the strategies that have been set. The perfect structural conditions and resource availability along with the structuralist approach give the firm a competitive advantage and favorable returns. The structural approaches do not cover distinctively the approaches on one another but make the firm dependent on its setting of strategy. The sensitivity risks to achieve future opportunities are usually successful through the adoption of reconstructionist approach as it has the ability of ensuring firms to venture to other territories.
The Three Strategy Propositions
The success of a firm depends on the value, profit, and people propositions in their development and realigning. The strategy contents are set by the value and profit proposition as it determines what the firm is offering and the gains accrued through the offering, while the people proposition determines the quality by which the firm executes. Hence, the development and the alignment of the propositions which reconstruct the economic environment define the strategy. The three propositions work hand-in-hand as failure tone proposition will led the firm to failing in achieving its objectives. The strategy propositions of structuralist approach are usually aligned in a manner that the firm pursues its differentiation or low cost which gives it a strategic position in a competitive environment. The success of the firm is unlikely if its alignment is based on differentiation as it targets the low-cost people proposition. There is an increased performance in the reconstruction’s approach as all the propositions are in the pursuance of both differentiation and low cost enabling the breaking of the value-cost trade-off, thus allowing the structure to be shaped by the strategy which is sustainable to both approaches of differentiation and low cost.
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Question1. Distinguish between structuralist and reconstructionist approaches.
The structuralist approach is the approach that a firm adopts in setting its strategy in its environment by using either two of the propositions to differentiate itself from its competitors or by offering low cost products to the market in order to achieve a competitive advantage. The firm is usually pursuing one of the two strategies in its operating environment. The reconstructionist approach is when a firm adopts all the propositions in its operations environment which has an effect of the firm achieving its competitive advantage from both strategies of low cost and differentiation at the same time.
Question2. Describe the value, profit, and people propositions
The value proposition is the package that is offered by firms to be attractive to the buyers of its products the incentives that are offered. It enables the firm to differentiate it and to provide the low cost products offered to the buyers to attract them. It is the utility that is derived from using a firm product and the ability to pay for the products. The profit proposition is the benefit that a firm accrues from offering its products to the buyer at a low cost (Kim & Mauborgne 2010 p 56). The firm gets revenues after giving its buyers incentives which make them to be royal to the firms products. The people proposition helps the firm in executing its functions. This proposition helps the firm in implementing its strategy, and thus it offers incentives to these people in order to motivate them.