Your Strategy Needs a Strategy
Classical strategy is based on achieving sustainable competitive advantage by positioning a firm optimally in an attractive market. Since the basis of competitive advantage in these environments is known and nonmalleable, advantage can be based on superior scale, differentiation (or, equivalently, scale within a narrower market segment), or superior capabilities.
Firms should deploy a classical approach in relatively stable and predictable markets with established, fixed bases of competition. In these nonmalleable markets, there is limited imminent risk of disruption, and industry conditions can be considered as given. Among the environmental signs that a classical approach can thrive are well-established industries with high returns to scale; stable, homogeneous business models; and modest growth rates.
Classical strategizing is a three-part process that consists of analysis, construction of a plan, and rigorous execution. The analysis is focused on the attractiveness of a market, the basis of competition, and a firm’s competitiveness. The resulting plan forecasts those factors, articulates the targeted position, and maps the steps to achieve it. Classical firms implement their plan exactly.
The Product Portfolio
Only companies with a balanced portfolio of products—as reflected in BCG's growth share matrix—can use their strengths to truly capitalize on growth opportunities.
The Experience Curve
Bruce Henderson’s hallmark concept illustrates the direct relationship of costs to accumulated production experience.