Summary What Is Strategy? by: Porter, Michael E.

In: Computers and Technology

Submitted By cmor7024
Words 487
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Michael Porter’s article describes the difference between operational efficiency and strategy by providing detail examples throughout the article. Porter explains how operational efficiency is key to any business but should not be the driver for business success. He outlines how strategy is the key to any business by creating a unique and valuable position within a market even though there could be trade-offs.

Porter refers to operational efficiency as performing industry wide actions better then your competitors. He provided an example of when Japanese’s electronic manufactures where able to lower cost and still provide top notch quality in the 1980’s. These manufactures quickly realized they were unable secure key market real estate within Japan. They need to change their strategic position. He simply showed how operational efficiency is not the way to sustain business as once these activities are known in the industry all similar companies will replicate them.

Porter refers to strategic position as performing industry wide actions in a complete different way. Porter uses Southwest Airlines and IKEA as companies who have used their strategic position to their fullest. Southwest airlines deliberately chose a different way to perform existing activities by using a Needs-Based source. Porter argues there are 3 key sources of strategic positioning and the only way to gain advantages; Variety-Base Positioning, Needs-Based Positioning, and Access-Based Positioning. These positions will help you find new markets, new productions and potentially new customers, key to business success.

Porter argues that with any 3 sources of a strategic position is not sustainable unless there are trade offs with other positions. A company should understand what they are capable of and what needs to change to sustain. Continental Airlines is a great example, which Porter uses,…...

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