What is strategy
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Transcript of What is strategy
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Michael E. PorterHarvard Business
School
What is Strategy? Harvard Business ReviewNovember – December, 1996
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Operational effectiveness
OE :practices, reducing defects, developing products faster
STRATEGY:different activites, different ways
1. Operational Effectiveness is no Strategy
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“A company can outperform rivals only if it can establish a difference that it can preserve.”
Michael Porter, What is Strategy?
With OE staying ahead of rivals gets harder and harder
Competitive Advantagerequires Sustainable Difference
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“Competitive Strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”
Michael Porter, What is Strategy?
2. strategy rests in unique activities
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SouthWest airlines
IKEA
Unique set of activities
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Strategic positions can be based on:Customers’ needsCompany’s products or servicesWay of Accessing Customers
The dimensions of aStrategic Position
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Choosing a unique position, does not guarantee a sustainable advantage.
Imitation –STRADDLINGContinental Airlines
3. A Sustainable Strategic PositionRequires Trade-offs
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Occurs when activities are in compatible Continental Airlines Trade-offs create and limit what company
offers. Honda- Civic, Toyota- Corollapositive Trade-offs Neutrogena
Trade-offs
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“Strategy is about combining activities”
Michael Porter, What is Strategy?
Fit locks out imitators by creating a chain as strong as its strongest link
What is southwest's core competence?One activities cost is lowered by other
4. Competitive Advantagerequires “fit” among activities
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The growth trap: desire to grow blurs strategic position Maytag Corp: washers and dryers Neutrogena :mass merchandising ,variety
of products
Profitable growth: distinctive
5. REDISCOVERING STRATEGY
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“Strategy renders choices about what not to do as important as choices about what to do.”- Michael Porter, What is Strategy?