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Summary What is Strategy - M. Porter
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What is Strategy?Operational Efeetiieness is NOT Strategy
Companies must be feeibbe to respond rapidby to compettte and market changes.
The quest for producttityy quabityy and speed has spawned a remarkabbe number of management
toobs and techniques: totab quabity managementy benchmarkingy tme-based compettony
outsourcingy partneringy reengineering and change management
Operational Efeetiieness: Neeessary but not Sufeient
Operatonab efectteness and strategy are both essentab to superior performancey which is the
primary goab of any enterprise.
A company can outperform ritabs onby if it can estabbish a diference that it can preserte.
Cost is generated by performing acttitesy and cost adtantage arises from performing partcubar
acttites more efcientby than compettors.
Operatonab efectteness (O)a means performing simibar acttites beeer than ritabs perform them.
Some companies are abbe to get more out of their inputs than others because they ebiminate waste
eforty empboy more adtanced technobogyy mottate empboyees beeery or hate greater insight into
managing partcubar acttites or sets of acttites.
For at beast the past decadey managers hate been preoccupied with improting O). Through programs
such as TXMy tme-based compettony and benchmarkingy they hate changed how they perform
acttites in order to ebiminate inefcienciesy improte customer satsfactony and achiete best
practce.
The more benchmarking companies doy the more they book abike. As ritabs imitate one another’s
improtements in quabityy cycbe tmesy or suppbier partnershipsy strategies conterge and competton
becomes a series of races down identcab paths that no one can win.
Strategy rests on unique aetiiities
Compettte strategy is about being diferent. It means debiberateby choosing a diferent set of
acttites to debiter a unique mie of tabue.
The essence of strategy is in the acttites: choosing to perform acttites diferentby or to perform
diferent acttites than ritabs. Strategic positons can be based on customer’ needsy customers’
accessibibityy or the tariety of a company’s products or sertices.
The origins of strategie positions
Strategic positoning emerges from three distnctte sources:
1. Variety-based positoning is based on the choice of product or sertice tarietes rather than
customer segments. Variety-based positoning makes economic sense when a company can
best produce partcubar products or sertices using distnctte sets of acttites.
2. Needs-based positoning is that of serting most or abb the needs of partcubar groups of
customers. This comes cboser to traditonab thinking about targetng a segment of customers.
3. Access-based positoning is when customers hate the same needs as other customers but
the best confguraton of acttites to reach them is diferent.
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