What Is Strategy By Michael Porter

What is strategy?
By Michael E. Porter

Operational Effectiveness is not Strategy
Operational effectiveness means to perform the company’s activities (create produce, sell and distribute; basicunits of competitive advantage) better than rivals perform them in order to deliver greater value to customers or create comparable value at a lower cost, or do both. Cost advantages arise fromperforming these activities more efficiently than competitors using available technologies, skills, management techniques and purchased inputs; reaching this way the maximum value a company can deliver(Productivity frontier).
However, due to the rapid diffusion of the best practices & technologies, everyone’s PPF is shifted leading to relative improvement for no company; customers and supplierskeep gains. In addition to that, benchmarking carries to homogeneity; the more that rivals imitate other’s improvements (quality, cycle times, outsourcing from effective third parties), the more thestrategies converge. As result, OE is not sufficient to achieve superior probabilities; competition based on OE alone is destructive. OE must not supplant Strategy

Principles of strategic positioning1.Strategy Rest on Unique Activities (Creating unique and valuable position)
Competitive strategy is about being different; choosing a different set of activities or performing activitiesdifferently. There are 3 different strategic positions/sources: variety based position (choosing a product to serve a wide array of customers, but meeting only one of their needs), needs based positioning(targeting a customer segment and serving them differently) and access-based positioning (segmenting customers who are accessible in different ways due to its geography or scale ). Whatever the basis,positioning requires tailoring activities. Strategy is the creation of a unique and valuable position involving different activities.

2.A sustainable strategic position requires trade-offs (Chose...