Michael Porter - What Is Strategy?

Summary
Michael Porter is famous economist, researcher, author, advisor, speaker and
professor at Harvard Business School. He has several publications in
economics and strategy concepts. He is famous for his work on competitive
strategy, nations of competitive advantage. He is known to be academic
gurus and one of the specialists on strategy in the world.
This article written by Michael Porter basically tells us about strategy. It
seems there is vast difference between definitions of strategy nowadays
than it used to be. In this article we can see how to make decision, when and
where to target the customer for the firm. It further delivers to use recourses,
set objectives that all are part of strategic planning for the future of the
company and all its departments.
Strategy is the creation of unique and valuable positions in a different set of
activities where there are few needs of many customers, broad needs of few
customers and broad needs of many customers in narrow market. Strategy
means being different and performing differently from rivals. There are
different positioning like variety based, need based and access based
positioning to make certain strategic positions in the organizations.
The article aims at redefining strategy by separating the term from
operational effectiveness where OE means performing similar types of
activities but better than competitors and rivals. Strategy is about being
different. Although both operational effectiveness and strategy are necessary
for the superior performance of an organization, they operate in different
ways. Operational effectiveness refers to practices which allows company to
better utilize its resources rather than limited to efficiency
A sustainable strategic position requires trade-offs. Trade-offs becomes
necessary when two activities are incompatible. Trade-offs arises for three
reasons. Firstly, inconsistencies in image or reputation; Secondly, trade-offs
arise from activities themselves and finally, trade-offs arise from limits on
internal coordination and control. Now a days tradeoff seems essential to
strategy as it creates need for choice that a company offers.
OE competition shifts the productivity frontier outward, effectively raising the
bar for everyone. Although such competition produces absolute improvement

in operational effectiveness, it leads to relative improvement for no one.

Competitive strategy is about being different. Managers have become
confused about the necessity of making choices. It means deliberately
choosing a different set of activities to deliver a unique mix of value. The
essence of strategy is choosing to perform activities differently than rivals
do.
The first important thing we should take from this article is that positioning is
still a significant as it is a way to shape advantages within a company.
Positioning choices determine not only which activities a company will
perform and how it will configure individual activities but also how activities
relate to one another. Due to more competition and rapid change in
technology some organization ignores basic things.
There are three types of fit simple consistency, reinforcement and
optimization effect. Fit locks out imitators by creating a chain that is as
strong as its strongest link. Fit among a companys activities creates
pressures and incentives to improve operational effectiveness, which makes
imitation even harder.
Strategic positions can be based on customers needs, customers
accessibility, or the variety. Coordination and information exchange across
activities to eliminate redundancy and minimize wasted effort are the most
basic types of effort optimization. The competitive value of individual
activities cannot be separated from the whole. Competitive advantage grows
out of the entire system of activities.
Globalization often allows growth that is consistent with strategy, opening up
larger markets for a focused strategy. Companies seeking growth through
broadening within their industry can best contain the risks to strategy. This
can create stand- alone units with its own brand name and tailored activities.
The challenge of developing or reestablishing a clear strategy is often
primarily an organizational one and depends on leadership. The productivity
frontier is constantly shifting outward as new technologies and management
approaches are developed and as new inputs become available.
Among all other influences, the desire to grow has perhaps the most
perverse effect on strategy. There is limit in growth as tradeoff is set by
strategy. Therefore, when one tries to compete in different levels then

confusion ,undermine organization motivation and focuses arises. The

solution is to grow by depending the strategic position.
Sweta Joshi
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