Summary Porter What Is Strategy

Marketing Strategy week #1 Porter (1996): What is strategy?

Summary: What is strategy? The article examines this question on different levels. First of all, operational effectiveness (OE) is clearly seperated from strategy. While OE is about achieving excellence in individual activities or functions, a competitve strategy is about combining activities and being different. There are 3 sources of strategic positioning 1) variety-based positioning, 2) needs-based positioning & 3) access-based positioning.To build a strategy you need to make trade-offs & tighten the fit among a company’s activities. If there is no fit among activites, there is no distinctive strategy & little sustainability. There are 3 types of fit 1) simple consistency, 2) activities are reinforcing & 3) optimization of effort. Growth can be a trap in developing a strategy.

1. Operational effectiveness is no strategy

Environment: companies must be flexible to respond rapidly to competetive & market changes, they must outsource aggressively to gain efficiencies because competitors can quickly imitate mgmt-techniques, new technologies, input improvements & superior ways of meeting customer’s needs.

Definition Operational effectiveness (OE):

It means performing similar activities better than rivals do & to better utilize inputs by, e.g., developing products faster. OE includes efficiency but is not limited to it. Some companies get more out of their inputs (within OE) because they:

- eliminate wasted effort

- employ more advanced technology

- motivate empolyees better

- have greater insight into managing particular activities/sets of activities

Definition Strategic Positioning (SP):

It means performing different activities from rivals’ or performing the same activities in different ways.

positioning – once the heart of strategy – is now rejected as too static for today’s dynamic markets & changing technologies; according to the new dogma,...