Preview

Chapter 1: What Is Strategy? (Michael Porter)

Powerful Essays
Open Document
Open Document
7705 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Chapter 1: What Is Strategy? (Michael Porter)
Operational Effectiveness Is Not Strategy For almost two decades, managers have been learning to play by a new set of rules. Companies must be flexible to respond rapidly to competitive and market changes. They must benchmark continuously to achieve best practices. They must outsource aggressively to gain efficiencies. And they must nurture a few core competencies in the race to stay ahead of rivals.

Positioning-once the heart of strategy-is rejected as too static for today's dynamic markets and changing technologies. According to the new dogma, rivals can quickly copy any market position, and competitive advantage is, at best, temporary.

But those beliefs are dangerous half-truths, and they are leading more and more companies down the path of mutually destructive competition. True, some barriers to competition are falling as regulation eases and markets become global. True, companies have properly invested energy in becoming leaner and more nimble. In many industries, however, what some call hyper competition is a self-inflicted wound, not the inevitable outcome of a changing paradigm of competition.

The root of the problem is the failure to distinguish between operational effectiveness and strategy. The quest for productivity, quality, and speed has spawned a remarkable number of management tools and techniques: total quality management, benchmarking, time-based competition, outsourcing, partnering, achieve best practice, reengineering, change management. Although the resulting operational improvement

Operational Effectiveness: Necessary but Not Sufficient

Operational effectiveness and strategy are both essential to superior performance, which, after all, is the primary goal of any enterprise. But they work in very different ways.

A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost,

You May Also Find These Documents Helpful

  • Best Essays

    Chase, R. B., Jacobs, F. R., & Aquilano, N. J. (2006). Operations management for competitive advantage (11th ed). New York: McGraw Hill/Irwin.…

    • 3043 Words
    • 13 Pages
    Best Essays
  • Good Essays

    Ops/571 Week 6

    • 1445 Words
    • 5 Pages

    Chase, R.B., Jacobs, F. R., & Aquilano, N.J. (2006) Operations management for competitive advantage (11th ed). New York: McGraw Hill/Irwin…

    • 1445 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    I. Introduction 1. There are several basic approaches to competing successfully and gaining a competitive advantage, but they all involve giving buyers what they perceive as superior value compared to the offerings of rival sellers. 2. This chapter describes the five basic competitive strategy option for building competitive advantage and delivering superior value to customers – which of the five to employ is a company’s first and foremost choice in crafting an overall strategy and beginning its quest for competitive advantage. II. Competitive Strategies and Industry Positioning. 1. By competitive strategy we mean the specifics of management’s game plan for competing successfully –its offensive and defensive moves to counter the maneuvers of rivals, its responses to whatever market conditions prevail at the moment, and its approach to securing a competitive advantage vis-à-vis rivals. 2. A company achieves competitive advantage whenever it has some unique way of delivering way of delivering superior value to customers. Core Concept…

    • 4409 Words
    • 18 Pages
    Powerful Essays
  • Satisfactory Essays

    Aquilano, N.J., Chase, R.B., & Jacobs, F.R. (2006). Operations management for competitive advantage (11th ed.). Retrieved from The University of Phoenix eBook Collection database.…

    • 274 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    The article I read was, What is Strategy? By Michael Porter. In this article Porter talks about the abilities to set objectives, facilitate resources and the ability to target the right customers. Porter goes onto talk about operational efficiency. He says that operational efficiency is basically preforming similar tasks better than your rivals in the market. He emphases being different than your rival, don’t try to be better and always out do them, be different and unique.…

    • 792 Words
    • 4 Pages
    Powerful Essays
  • Powerful Essays

    Successful implementation of a new organizational strategy can turn a good organization into a great one. Conversely, strategies that fail or generate poor results can quickly damage the organization’s reputation and brand, internally and externally. Effective strategy execution is the responsibility of all levels of management, who must be involved actively and consistently to orchestrate required organizational changes and to manage the portfolio of investments that underpin these change initiatives.…

    • 1204 Words
    • 5 Pages
    Powerful Essays
  • Powerful Essays

    What Is Strategy

    • 10771 Words
    • 44 Pages

    Today's dynamic markets and technologies have called into question the sustainability of competitive advantage. Under pressure to improve productivity, quality, and speed, managers have embraced tools such as TQM, benchmarking, and reengineering. Dramatic operational improvements have resulted, but rarely have these gains translated into sustainable profitability. And gradually, the tools have taken the place of strategy. In his five-part article, Michael Porter explores how that shift has led to the rise of mutually destructive competitive battles that damage the profitability of many companies. As managers push to improve on all fronts, they move further away from viable competitive positions. Porter argues that operational effectiveness (OE), although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. 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. Porter thus traces the economic basis of competitive advantage down to the level of the specific activities a company performs. Using cases such as Ikea and Vanguard, he shows how making trade-offs among activities is critical to the sustainability of…

    • 10771 Words
    • 44 Pages
    Powerful Essays
  • Powerful Essays

    References: Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano. Operations Management for Competitive Advantage 11th ed. (2006). New York : Mc Graw Hill. Prentice Hall. Retrieved January 21, 2010, from University of Phoenix, Resource, OP571- Course materials website: https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReader.aspx?assetMetaId=d9703686-ec9b-4406-9d6c-5e2b7e1c5476&assetDataId=6a904f44-0d92-400e-bdad-f468a68ec882&assetpdfdataid=418892c0-fc27-49ab-a90e-ba4f6b3b5471…

    • 1336 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    The aim of this paper is confronted with the question of how the fit concept in strategic…

    • 7291 Words
    • 30 Pages
    Powerful Essays
  • Satisfactory Essays

    Ans : In a competitive situation each & every organization wants to create strong market position .…

    • 468 Words
    • 3 Pages
    Satisfactory Essays
  • Better Essays

    Operational Strategy

    • 3820 Words
    • 16 Pages

    The relationship between an organisation’s strategy and the operations involved is a key determinant of its ability to achieve long-term success…

    • 3820 Words
    • 16 Pages
    Better Essays
  • Powerful Essays

    Quality Parts Company

    • 2187 Words
    • 9 Pages

    Bibliography: Chase, Richard B., Nicholas J. Aquilano, and F. Robert. Jacobs. Operations Management for Competitive Advantage. Boston, MA: McGraw-Hill, 2004.…

    • 2187 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Operation Strategy

    • 4805 Words
    • 20 Pages

    1. 2. 3. 4. 5. 6. What is ‘operations’ and why it is so important? What is strategy? What is operations strategy? How should operations reflect overall strategy? How can operations strategy learn from operational experience? How do the requirements of the market influence operations strategy? 7. How can the intrinsic capabilities of an operation’s resources influence operations strategy? 8. What is the difference between the ‘content’ and the ‘process’ of operations strategy? 9. What are operations strategy performance objectives? 10. What are operations…

    • 4805 Words
    • 20 Pages
    Powerful Essays
  • Best Essays

    Operations strategy looks at the patterns of strategic decisions and actions in a bid to set the roles, objectives and activities of the operations (Slack et al. 2010). An understanding of these strategies is important in ensuring that organizations are well aware of the requirements needed to meet the corporate objectives set about by management.…

    • 3932 Words
    • 12 Pages
    Best Essays
  • Satisfactory Essays

    ”A company can outperform its rivals only if it establishes a difference that it can reserve”. - Michael Porter…

    • 717 Words
    • 3 Pages
    Satisfactory Essays