Strategy according to Porter
By Terje Bjørnsen
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Greater value and/or
lower costs
A difference that
can be preserved
Competitive
Competitive
position
position
Operational
Operational
Effectiveness
Effectiveness
Performing similar
activities better
than rivals.
Strategic
Strategic
Positioning
Positioning
Excellence
Excellence in
in
individual
activities
individual activities
Uniqueness
Uniqueness by
by
combining
activities
combining activities
Performing different
activities from rivals’ or
performing similar
activities in different ways.
Fit of activities drives competitive advantage and sustainability
Tools:
• TQM
• Benchmarking
• Outsourcing
• Reengineering
• etc.
Strategic
position’s
sources
Variety
based
Which
Choices: products?
Need
based
A sustainable
position require
trade-offs with
other positions.
Access
based
Which Which
needs? way to reach
customers?
Trade-offs
occur when
activities are
incompatible.
Operational effectiveness
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Explanatory
catalogues,
informative displays
and labels
:
*
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Self-transport
by customers
Limited
customer
service
Ease of
transport and
assembly
Self-assembly
by customers
“Knock-down”
kit packaging
Modular
furniture
design
Wide variety
with ease of
manufacturing
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Suburban
locations with
ample parking
Hightraffic store
layout
Self-selection
by customers
Limited
sales
staffing
Increased
likelihood of
future
purchase
In-house
designed focused
on cost of
manufacturing
Ample
inventory
on site
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impulse
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Most
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sourcing from
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Source: M. E. Porter What is strategy HBR nov-dec 1996
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Financial Times: Full of sound and theory, but signifying nothing; May 10 1999
9(
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B ( 00
iii
Henry Mintzberg: The Fall and Rise of Strategic Planning; Harvard Business Review Jan-Feb 1994
iv
Michael Hannan and John Freeman: The population Ecology of Organisations; American Journal of
Sociology, March 1977
v
Henry Mintzberg: Crafting Strategy; Harvard Business Review Jul-Aug 1987
vi
Michael E. Porter: Competitive Strategy; The Free Press, 1985
!