Porter - what is strategy?

Question 1

Operational effectiveness

Answer 1

performing activities better (faster or with fewer inputs) than rivals.

these best practises are easily emulated, meaning that the production possibility frontier of the industry shifts outwards but the firm loses its competitive advantage

-> competitive convergence

Question 2

competitive convergence

Answer 2

when firms become less distinguishable from each other.

made worse by benchmarking

Question 3

what is strategic positioning?

Answer 3

achieving sustainable competitive advantage by differentiating a firm from rivals.

the strategy henceforth is the creation of a unique and valuable position, involving a different set of activities to rivals. This will involve making trade-offs.

Question 4

what are porter’s generic strategies?

Answer 4

differentiation
- differentiate from competitors, positioning.

cost leadership
- increase market share through low prices, and lower costs.

focus
- niche markets as opposed to broad

Question 5

strategy and fit

Answer 5

strategy involves creating ‘fit’ among a company’s activities.

= the ways in which a company’s activities interact and reinforce one another.

It drives both competitive advantage and sustainability (if activities reinforce each other, they are more difficult to imitate)

Question 6

key points

Answer 6

1. there is hypercompetition (benchmarking makes thus worse) meaning that operational effectiveness is not enough.
2. strategy rests on unique activities - strategic position.
3. you will be imitated so you need to create barriers; brand, commitment and tight coordination and control.
4. sustainable strategic position therefore relies on tradeoffs.
5. generic strategies - look for synergy between activity and strategy
6. singlemindedness, engage whole business.
   - BHAGS