Strategic control points are the foundations of defensive business strategy. They are the mechanisms that protect the company’s profit streams against erosion from competitors, customer power, and supplier power. SCPs come in many forms. Examples include having a dominant market position in attractive segments, locking up distribution channels, controlling the value chain, owning a de facto business standard, and many more.
Strategic
control points are industry-specific, and some are more relevant than others.
In mobile telephony, for example, innovation lead time is crucial. In the
container shipping industry, large shipping capacity is essential. In retail,
advanced inventory management technology is vital. In the software industry,
owning the de facto technology standard is the name of the game. And so forth.
The best firms secure two or more relevant SCPs in their industry.
STRATEGIC CONTROL POINTS ARE
IMPORTANT FOR THREE REASONS
1. The more successful your business, the more likely
competitors will try to take a piece of the action.
2.
Without strategic control points, company growth becomes constrained by
competitors who can inflict considerable harm.
3.
Strategic control points offer a measure of protection against economic cycles.