STRATEGY ACCORDING TOMICHAEL PORTER                   1    Wali Memon                 walimemon.com
WHAT IS STRATEGY?          HARVARD BUSINESS REVIEW          NOVEMBER – DECEMBER, 1996• Michael E. Porter  • Harvard Busine...
THE PURPOSE OF STRATEGY• “(strategy is)…essential to superior  performance, which, after all, is the primary  goal of any ...
COMPETITIVE ADVANTAGE • Outperforming the competition  • usually measured by Return on Equity Sustained Competitive Advant...
PORTER’S ROUTE TOCOMPETITIVE ADVANTAGE  • Strategic discipline to strengthen    strategic position  • Continual improvemen...
OPERATIONAL EFFECTIVENESS  • Operational effectiveness (doing individual    activities well) can and will likely be readil...
COMPETITIVE ADVANTAGEREQUIRES SUSTAINABLE DIFFERENCE  • “A company can outperform rivals only if    it can establish a dif...
COMPETITIVE ADVANTAGEREQUIRES A DEFENSIBLE POSITION   • “Competitive Strategy is about being     different. It means delib...
THE DIMENSIONS OF A              STRATEGIC POSITION• Strategic positions can be based on:  • Customers’ needs    • Wal*Mar...
A DEFENSIBLE STRATEGIC POSITION      INVOLVES TRADE-OFFS• A Strategic Position is sustainable only to the extent  to which...
STRATEGY IS ABOUT CHOICE• Strategy is also about what not to do!• “Strategy … requires hard choices.”• One of the leader’s...
“STRATEGY RENDERS CHOICES ABOUT WHAT NOT TO DO AS IMPORTANT AS   CHOICES ABOUT WHAT TO DO.”   - MICHAEL PORTER, WHAT IS ST...
COMPETITIVE ADVANTAGEREQUIRES “FIT” AMONG ACTIVITIES    • “Strategy is about combining activities”                        ...
STRATEGY ACCORDING TO MICHAEL PORTER• The goal is to win!• Deliberate, disciplined  choices based on analysis• Leadership ...
COMPARISONS AND CONTRASTS  • Michael Porter                       • Henry Mintzberg  Harvard Business School              ...
TWO SCHOOLS OF STRATEGY    Position School                        Process School• “Deliberate”                          • ...
ORGANIZATIONAL GOALS   Position School                        Process School• Competitive                           • Cont...
RELATIONSHIP TO ENVIRONMENT   Position School                      Process School• Determine,                          • L...
ORGANIZATIONAL CAPABILITIES    Position School                       Process School• Build mutually-                      ...
IMPLICATIONS FOR STRATEGIC MANAGEMENT   Position School                       Process School• Leadership                  ...
QUESTION FOR YOU!• Which “school of strategy” do you find more  convincing personally?• Why?         Wali Memon           ...
PREFERENCE FOR   POSITION VERSUS PROCESSSTRATEGY SEEMS TO DEPEND ON….•   Degree of Volatility in the environment•   Size o...
LET’S COMPROMISE• “Strategy formation walks on two feet…  one deliberate, the other emergent.”                            ...
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Your Strategy Defines Your Future

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What is Your Strategy?

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  • Welcome and Introduce self here
  • Your Strategy Defines Your Future

    1. 1. STRATEGY ACCORDING TOMICHAEL PORTER 1 Wali Memon walimemon.com
    2. 2. WHAT IS STRATEGY? HARVARD BUSINESS REVIEW NOVEMBER – DECEMBER, 1996• Michael E. Porter • Harvard Business School Wali Memon 2 walimemon.com
    3. 3. THE PURPOSE OF STRATEGY• “(strategy is)…essential to superior performance, which, after all, is the primary goal of any enterprise.” • Michael E. Porter, What is Strategy?• Strategy is about achieving competitive advantage – winning! Wali Memon 3 walimemon.com
    4. 4. COMPETITIVE ADVANTAGE • Outperforming the competition • usually measured by Return on Equity Sustained Competitive Advantage • Consistently outperforming the competition over time Wali Memon 4 walimemon.com
    5. 5. PORTER’S ROUTE TOCOMPETITIVE ADVANTAGE • Strategic discipline to strengthen strategic position • Continual improvement in operational effectiveness Wali Memon 5 walimemon.com
    6. 6. OPERATIONAL EFFECTIVENESS • Operational effectiveness (doing individual activities well) can and will likely be readily copied and therefore is not a sustainable source of advantage. • However, it is still a necessary, (although not sufficient) condition for competitive advantage. Wali Memon 6 walimemon.com
    7. 7. COMPETITIVE ADVANTAGEREQUIRES SUSTAINABLE DIFFERENCE • “A company can outperform rivals only if it can establish a difference that it can preserve.” • Michael Porter, What is Strategy? Wali Memon 7 walimemon.com
    8. 8. COMPETITIVE ADVANTAGEREQUIRES A DEFENSIBLE POSITION • “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? Wali Memon 8 walimemon.com
    9. 9. THE DIMENSIONS OF A STRATEGIC POSITION• Strategic positions can be based on: • Customers’ needs • Wal*Mart, Superstore • Company’s products or services • Toys-T-Us • Way of Accessing Customers • Amazon.com, Mary Kay Cosmetics Wali Memon 9 walimemon.com
    10. 10. A DEFENSIBLE STRATEGIC POSITION INVOLVES TRADE-OFFS• A Strategic Position is sustainable only to the extent to which occupying it involves tradeoffs in the supporting activities. • The necessity for tradeoffs is not only a function of resource constraints • Some activities are inherently incompatible Wali Memon 10 walimemon.com
    11. 11. STRATEGY IS ABOUT CHOICE• Strategy is also about what not to do!• “Strategy … requires hard choices.”• One of the leader’s jobs …(is) to say no. • Michael Porter, What is Strategy? Wali Memon 11 walimemon.com
    12. 12. “STRATEGY RENDERS CHOICES ABOUT WHAT NOT TO DO AS IMPORTANT AS CHOICES ABOUT WHAT TO DO.” - MICHAEL PORTER, WHAT IS STRATEGY? Wali Memon 12 walimemon.com
    13. 13. COMPETITIVE ADVANTAGEREQUIRES “FIT” AMONG ACTIVITIES • “Strategy is about combining activities” • Michael Porter, What is Strategy? • For consistency with strategy • For mutual reinforcement • To optimize effort and mix of activities Wali Memon 13 walimemon.com
    14. 14. STRATEGY ACCORDING TO MICHAEL PORTER• The goal is to win!• Deliberate, disciplined choices based on analysis• Leadership is key Wali Memon 14 walimemon.com
    15. 15. COMPARISONS AND CONTRASTS • Michael Porter • Henry Mintzberg Harvard Business School McGill University Wali Memon 15 walimemon.com
    16. 16. TWO SCHOOLS OF STRATEGY Position School Process School• “Deliberate” • “Emergent” strategy strategy• (Porter / Harvard) • (Mintzberg / McGill)• Strategy is the • Strategy is an conscious, intuitive process analytical through which the development of a organization distinct position in evolves by the environment adapting to its environment Wali Memon 16 walimemon.com
    17. 17. ORGANIZATIONAL GOALS Position School Process School• Competitive • Continued Advantage Existence • “(strategy is)… • “(strategy is)…all essential to superior things necessary performance, for the successful which, after all, is functioning of an the primary goal of organization as any enterprise” an adaptive • Michael Porter mechanism.” • What is Strategy? • Richard T. Pascale • The Honda Effect Wali Memon 17 walimemon.com
    18. 18. RELATIONSHIP TO ENVIRONMENT Position School Process School• Determine, • Learn and develop and evolve through defend an ongoing advantageous experience position in the within the environment environment• Be disciplined • Don’t be afraid about this choice to experiment Wali Memon 18 walimemon.com
    19. 19. ORGANIZATIONAL CAPABILITIES Position School Process School• Build mutually- • Encourage reinforcing “fit” experimentation among and variety in organizational activities, from activities in tightly which potential focused support new strategies of chosen may emerge strategic position Wali Memon 19 walimemon.com
    20. 20. IMPLICATIONS FOR STRATEGIC MANAGEMENT Position School Process School• Leadership • Leadership conceptualizes nurtures a strategy based on learning, flexible analysis and organization mobilizes the which is highly organization in responsive and well-coordinated adaptable to the support of it. environment. Wali Memon 20 walimemon.com
    21. 21. QUESTION FOR YOU!• Which “school of strategy” do you find more convincing personally?• Why? Wali Memon 21 walimemon.com
    22. 22. PREFERENCE FOR POSITION VERSUS PROCESSSTRATEGY SEEMS TO DEPEND ON….• Degree of Volatility in the environment• Size of the Company• Internal / External locus of control• Risk / Return preference• Management style / ego Wali Memon 22 walimemon.com
    23. 23. LET’S COMPROMISE• “Strategy formation walks on two feet… one deliberate, the other emergent.” • Henry Mintzberg • Of Strategies Deliberate and Emergent Wali Memon 23 walimemon.com

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