Strategic Fit in Corporate and Supply Chain Strategy

Introduction

• Strategic fit is crucial for both corporate and supply chain strategy.
• It refers to the way an organization's activities complement each other to create competitive advantages.
• Two main perspectives:
  • Internal Synergies: Focus on complementary activities within the organization.
  • External Alignment: How a company's resources and capabilities match opportunities in the external environment.
• Effective strategic fit combines both internal and external perspectives.

Importance of Strategic Fit

• Achieving strategic fit typically leads to competitive advantage.
• Consistent actions reinforce each other, creating economic value.
• Sustainable competitive advantage is achieved by creating complex, intangible resources that are difficult for competitors to replicate.

Porter's Types of Fit

1. Simple Consistency: Ensures actions and strategies are not contradictory.
2. Reinforcing Activities: Activities complement and create synergies.
3. Optimization Efforts: Eliminate redundancies and minimize waste.

Strategic Fit in Supply Chain Management

• Supply chain managers play a key role in achieving strategic fit.
• Supply chains need to align with both internal corporate strategy and the external environment.

Case Studies

Walmart

• Economic Context: Thrived during the Great Recession due to strategic fit.
• Low-Cost Strategy:
  • Focused on providing low-cost products and services.
  • Marketing, store operations, and supply chain functions all reinforce the low-cost strategy.
• Operational Techniques:
  • Buy in bulk for volume discounts.
  • Efficient cross-docking and minimizing safety stock in distribution.
• Result: Achieves strategic fit by aligning internal capabilities with external market conditions.

Kmart

• Once larger than Walmart but failed due to lack of strategic fit.
• Invested in marketing and promotional activities that didn't align with a low-cost retail market.
• In contrast, Walmart invested in logistics, which aligned with a low-cost strategy.
• Outcome: Kmart went bankrupt while Walmart thrived, illustrating the importance of strategic fit.

Conclusion

• Strategic fit drives competitive advantage by reducing costs or increasing differentiation.
• The complexity of achieving fit makes it a sustainable competitive advantage.
• It requires focused and consistent actions that match external conditions and internal strategies.
• Difficult for competitors to replicate, thereby securing a firm's position in the market.

Key Takeaways

• FIT is essential for creating and maintaining a competitive edge.
• It requires collaboration and consistency across all organizational levels and functions.
• Success in achieving strategic fit can lead to long-term dominance in the market.