Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
What is a Strategy ? 
Porter, M. E. 1996. Harvard 
Business Review (November- 
December) 
International Strategic Manageme...
Agenda 
• What is Strategy 
• Operational Effectiveness Is Not Strategy 
• Strategy Rests on Unique Activities 
• A Sustai...
What is Strategy 
• is the creation of a unique and valuable position, involving 
a different set of activities : 
• Few n...
Operational Effectiveness ≠ 
Strategy 
Operational 
effectiveness 
Strategic 
positioning 
Delivers greater value 
Allows ...
Strategy Rests on Unique 
Activities 
• is about being different. 
• deliberately choosing a different set of activities t...
The Origins of Strategic 
Positions 
• are not mutually exclusive and often overlap. 
• Variety-based positioning: 
• Prod...
A Sustainable Strategic 
Position Requires Trade-offs 
• a sustainable advantage cannot be guaranteed by simply 
choosing ...
The reasons for Trade-offs 
• occur when activities are incompatible and arise for 
three reasons: 
1. by delivering anoth...
Trade-offs Create the Need for 
Choice 
• Trade-offs create the need for choice and protect against repositioners 
and str...
Fit Drives Both Competitive Advantage 
and Sustainability 
• Positioning choices determine not only : 
• which activities ...
Three Types of Fit 
1. First-order fit: 
• consistency between each activity (function) and the overall strategy. 
• ensur...
Fit and Sustainability 
• Fit is fundamental to the sustainability of that advantage 
• it is harder for a competitor to m...
Alternate Views of 
Strategy 
The Implicit Strategy Model 
of the Past Decade 
Sustainable Competitive Advantage 
One idea...
Rediscovering Strategy 
• Failure to Choose 
• The Growth Trap 
• Profitable Growth 
• The Role of Leadership
Failure to Choose 
• best-practice" mentality of the 
managers, 
• making no trade-offs, 
• incessantly pursuing operation...
The Growth Trap 
• extending their product lines, adding new 
features, imitating competitors’ popular 
services, matching...
Profitable Growth 
• leveraging the existing activity system 
by offering features or services that 
rivals would find imp...
The Role of Leadership 
• strong leaders, who are willing to make choices, are essential 
• define and communicate the cor...
Conclusion 
• A company must continually improve its operational 
effectiveness and actively try to shift the productivity...
Upcoming SlideShare
Loading in …5
×

What is a Strategy? Michael Porter - Harvard Business Review

100,933 views

Published on

What is Strategy
Operational Effectiveness Is Not Strategy
Strategy Rests on Unique Activities
A Sustainable Strategic Position Requires Trade-offs
Fit Drives Both Competitive Advantage and Sustainability
Rediscovering Strategy

Published in: Business
  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yxufevpm } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yxufevpm } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yxufevpm } ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yxufevpm } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yxufevpm } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yxufevpm } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y6a5rkg5 } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • New $31,515 USD profit system revealed. using an automated software that predicts the winners for Soccer, Horse racing and even major sports such as NBA, NFL, NHL, MLB! ■■■ https://tinyurl.com/yxcmgjf5
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • What every man is obsessed over, but will never tell you. click here ▲▲▲ https://tinyurl.com/y4zgtag4
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y3nhqquc } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y3nhqquc } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y3nhqquc } ......................................................................................................................... 1.DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/y3nhqquc } ......................................................................................................................... 1.DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/y3nhqquc } ......................................................................................................................... 1.DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/y3nhqquc } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

What is a Strategy? Michael Porter - Harvard Business Review

  1. 1. What is a Strategy ? Porter, M. E. 1996. Harvard Business Review (November- December) International Strategic Management Donny Sitompul donny@donnysitompul.com
  2. 2. Agenda • What is Strategy • Operational Effectiveness Is Not Strategy • Strategy Rests on Unique Activities • A Sustainable Strategic Position Requires Trade-offs • Fit Drives Both Competitive Advantage and Sustainability • Rediscovering Strategy
  3. 3. What is Strategy • is the creation of a unique and valuable position, involving a different set of activities : • Few needs of many customers • Broad needs of few customers • Broad needs of many customers in a narrow market • requires us to make trade-offs in competing – to choose what not to do • involves creating “fit” among a company’s activities.
  4. 4. Operational Effectiveness ≠ Strategy Operational effectiveness Strategic positioning Delivers greater value Allows a company to charge higher average unit prices. Perform different activities from competitor or perform similar activities in different ways. Delivers greater efficiency Results in lower average unit costs Perform similar activities better than competitors
  5. 5. Strategy Rests on Unique Activities • is about being different. • deliberately choosing a different set of activities to deliver a unique mix of value. • choosing to perform activities differently than rivals. • is the creation of a unique and valuable position, involving a different set of activities.
  6. 6. The Origins of Strategic Positions • are not mutually exclusive and often overlap. • Variety-based positioning: • Produce a subset of an industry’s products or services. • based on the choice of product or service varieties rather than customer segments. • Needs-based positioning: • Serves most or all the needs of a particular group of customers. • based on targeting a segment of customers. • Access-based positioning: • Segmenting customers who are accessible in different ways. • Access can be a function of customer geography or customer scale or of anything that requires a different set of activities to reach customers in the best way.
  7. 7. A Sustainable Strategic Position Requires Trade-offs • a sustainable advantage cannot be guaranteed by simply choosing a unique position • competitors will imitate a valuable position in one of the two following ways: 1. choose to reposition itself to match the superior performer. 2. seek to match the benefits of a successful position while maintaining its existing position (straddling). • to be sustainable there must be trade-offs with other positions. • "A trade-off means that more of one thing necessitates less of another“
  8. 8. The reasons for Trade-offs • occur when activities are incompatible and arise for three reasons: 1. by delivering another kind of value or attempting to deliver two inconsistent things at the same time. 2. an activity is over designed or under designed. 3. companies that try to be all things to all customers, often risk confusion amongst its employees, who then attempt to make day-to-day operating decisions without a clear framework.
  9. 9. Trade-offs Create the Need for Choice • Trade-offs create the need for choice and protect against repositioners and straddlers • Strategy can also be defined as making trade-offs in competing • The essence of strategy is choosing what not to do.
  10. 10. Fit Drives Both Competitive Advantage and Sustainability • 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. • strategy concentrates on combining activities. • Fit locks out imitators by creating a chain that is as strong as its strongest link • is the central component of competitive advantage because discrete activities often affect one another. • is strategy-specific because it enhances a position’s uniqueness and amplifies trade-offs.
  11. 11. Three Types of Fit 1. First-order fit: • consistency between each activity (function) and the overall strategy. • ensures that the competitive advantages cumulate and do not erode or cancel themselves out. • consistency makes it easier to communicate the strategy to customers, employees, and shareholders, and improves implementation through single-mindedness in the corporation. 2. Second-order fit: • Occurs when activities are reinforcing. 3. Third-order fit: • as optimization of effort. • Coordination and information exchange across activities to eliminate redundancy and minimize wasted effort are the most basic types of effort optimization.
  12. 12. Fit and Sustainability • Fit is fundamental to the sustainability of that advantage • it is harder for a competitor to match an array of interlocked activities than it is merely to replicate an individual activity. • Fit among activities creates pressures and incentives to improve operational effectiveness, which makes imitation even harder. • Strategic positions should have a horizon of a decade or more. • allowing an organization to build unique capabilities and skills custom-fitted to its strategy. • If there is no fit among activities, there is no distinctive strategy and little sustainability.
  13. 13. Alternate Views of Strategy The Implicit Strategy Model of the Past Decade Sustainable Competitive Advantage One ideal competitive position in the industry Unique competitive position for the company Benchmarking of all activities and achieving best practice Activities tailored to strategy Aggressive outsourcing and partnering to gain efficiencies Clear trade-offs and choices vis-a-vs competitors Advantages rest on a few key success factors, critical resources, and core competencies Competitive advantage arises from fit across activities Flexibility and rapid responses to all competitive market changes Sustainability comes from the activity system, not the parts Operational effectiveness a given
  14. 14. Rediscovering Strategy • Failure to Choose • The Growth Trap • Profitable Growth • The Role of Leadership
  15. 15. Failure to Choose • best-practice" mentality of the managers, • making no trade-offs, • incessantly pursuing operational effectiveness, and • imitating competitors to catch up in the race for operational effectiveness.
  16. 16. The Growth Trap • extending their product lines, adding new features, imitating competitors’ popular services, matching processes, and making acquisitions • blur uniqueness, creates compromises, reduces fit, and ultimately undermines competitive advantage.
  17. 17. Profitable Growth • leveraging the existing activity system by offering features or services that rivals would find impossible or costly to match on a stand-alone basis.
  18. 18. The Role of Leadership • strong leaders, who are willing to make choices, are essential • define and communicate the core company’s unique position, • make trade-offs, and • forge fit among the various activities of the company • decide which changes in the industry and customer demands, is the company going to respond to. • deciding which target group of customers, varieties, and needs the company should serve is fundamental to developing a strategy. • deciding not to serve other customers or needs and not to offer certain features or services.
  19. 19. Conclusion • A company must continually improve its operational effectiveness and actively try to shift the productivity frontier; • at the same time, there needs to be ongoing effort to extend its uniqueness while strengthening the fit among its activities • a company may have to change its strategic position due to a major structural change in the industry. • a company should choose its new position depending on its ability to find new trade-offs and leverage a new system of complementary activities into a sustainable advantage.

×