One suspects that there is not only more to come from Michael Porter, but also that it will be wholly consistent with what he has said in the past. Porter’s Five Forces. The book deals with strategy at a high level. This article has benefited greatly from the assistance of many individuals and companies. (To make a summary of the article while answering the question, the answer directly related to the questions are highlighted ) 1. What Is Strategy? "Fit locks out imitators by creating a chain that is as strong as its strongest link" (p. 70). 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. However, both are important for higher performance. Although their needs are similar to those of other customers, the best configuration of activities to reach them is different. A Sustainable Strategic Position Requires Trade-offs. Coordination and information exchange across activities to eliminate redundancy and minimize wasted effort are the most basic types of effort optimization. However, most companies start with a unique strategic position involving clear trade-offs. Thus, strategy can also be defined as making trade-offs in competing. Michael Porter argues that operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. Strategy Explained. First-order fit: Simple consistency between each activity (function) and the overall strategy. Thus, deepening a position means making the company’s activities more distinctive, strengthening fit, and communicating strategy better to those customers who value it. It is based on targeting a segment of customers. 3. Many managers and leaders and organizations think that they are trying to be the best organization in their industry. Competitive advantage stems from the activities of the entire system. This is a very strong statement that Michael Porter makes. It refers to many practices that allow a company to better utilize its inputs. What are Porter's Generic Strategies? Harvard Business Review (November-December): 61-78. He illustrates how the last quarter-century saw managers believing corporate strategy is the nature of a firm’s operational effectiveness – or business activity efficiencies. "A sound strategy is undermined by a misguided view of competition, by organizational failures, and, especially, by the desire to grow" (p. 75). Michael Porter helicopters into the HQ of Acorn, a company trying to develop a strategy to move forward and decide where to spend its limited resources. Professor Porter is generally recognized as the "Father of Strategy", as has been identified in a variety of rankings and Er gilt als einer der führenden Managementtheoretiker. General management should do more than just stewardship of individual functions. Strategy defines the company’s distinctive approach to competing and the competitive advantages on which it will be based. In contrast, the essence of strategy is choosing a unique and valuable position rooted in systems of activities that are much more difficult to match. Consistency ensures that the competitive advantages of activities cumulate and do not erode or cancel themselves out. Thus, for most customers, this type of positioning will only meet a subset of their needs. It must deliver greater value to customers or create compa-rable value … Porter's Generic Strategies offer a great starting point for strategic decision-making. Michael Porter created Porter’s five forces analysis, which is instrumental in business strategy development. Under pressure to improve productivity, quality, and speed, managers have embraced tools such as TQM, benchmarking, and reengineering. Many managers and leaders and organizations think that they are trying to be the best organization in their industry. However, Porter argues that most companies today compete on the basis of operational effectiveness. The productivity frontier is the sum of all existing best practices at any given time or the maximum value that a company can create at a given cost, using the best available technologies, skills, management techniques, and purchased inputs. "A trade-off means that more of one thing necessitates less of another" (p. 68). Moreover, the essence of strategy, according to Porter, is choosing to perform activities differently than rivals. It means performing different activi-ties from rivals, or performing similar activi-ties in different ways. 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. 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" (p. 78). Needs-based positioning: Serves most or all the needs of a particular group of customers. The frontier is constantly shifting outward as new technologies and management approaches are developed and as new inputs become available. If you read nothing else on strategy, read these 10 articles (featuring “What Is Strategy?” by Michael E. Porter).We've combed through hundreds of Harvard Business Review articles and selected the most important ones to help you catalyze your organization's strategy development and execution. Access-based positioning: Segmenting customers who are accessible in different ways. Thus, managers simply do not understand the need to have a strategy. 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