Michael Porter - What Is Strategy? Summary

What is Strategy? - Michael Porter Author of the article, "What is strategy?" reasoning based on the assumption that a company if a company can have a strong position, and be able to combine different activities can create sustainable competitive advantage which can lead a firm towards profitability and sustain its position in the market. This article is important for this course because firm ability to make decisions on how, when and where to target a customer group, use recourses, set objectives are all part of strategic planning for the future of the company and all its departments such as accounting, finance and Human resources. The first important thing we should take from this article is that Porter further argues that positioning is still a significant way to shape advantages within a company, he points out that misunderstanding exists to distinguish between operational effectiveness and strategy. The replacement of strategy by so-called management tools has been responsible why many firms have increased operational effectiveness but have been unable to translate those improvements into values for customer where profit can be earned and profitability be increased. Secondly, with rapid change in technology, organizations ignores it basic fundamentals. It is significant for an organization to have unique strategic position to shape the company and be able to shift smoothly in competitive market. Thirdly, an organization shouldn't purely relay on operational effectiveness as strategy replacement works only as long competitors not employing to same process and improvements but as soon those best practices are made common within the industry, operational effectiveness becomes mutual destructive and counter-productive. Combining the right activities and leave other activities aside are essential part of the strategy making. Porter suggest that those interconnections are the heart of any strategy, as those links are hard to copy therefore lead to