The management of an enterprise is appointed by the Board of Directors with the mandate to position the business such that it can deliver a defined level of performance in terms of wealth creation. The second value creation step positions the enterprise in a competitive space where it can sustain an income cost ratio that creates wealth. Value positioning considers the business in context of its potential markets, competitors and economic environment. The outputs of the value positioning process are business strategies and policies, budget allocations, branding strategies and the cultural and social orientation of the enterprise.
Value positioning is the process whereby management decides how the business is positioned relative to competitors and the market segments it aims to penetrate. The value positioning relates to strategic planning where management defines strengths, weaknesses, opportunities and threats to the business and determine how to react to these elements.
The brand strategy is a major deliverable in of the positioning process. Branding defines how the management will differentiate the company’s value offering from that of their competition. Positioning is executed in the form of defining the business logo, colours and slogans. Irrespective of whether the branding is company oriented or product oriented it is important that all business processes are aligned with the branding strategy of the enterprise. The positioning of an enterprise should go further than just looking at the markets and competitors.
The company must also position it in a social, legal and cultural context. The social context defines the role the enterprise will play in uplifting and educating the communities within which it operates. The legal context will define which legal structures and governance the company needs to comply with. The cultural context must be created by defining the values that all employees of the enterprise should strive to uphold.
The value positioning defined by management sets the agenda of priorities and budget allocation that will optimally secure the return on investment expected of shareholders. The value measurement process determines the behaviour of the business and aligns the behaviour of human capital with the value expectations of all stakeholders e.g. shareholders, management, customers, employees and partners. Value should be measured and reported on from every stakeholder’s perspective. A true balanced scorecard will drive performance improvements for all five stakeholder dimensions.