Article review :What is Strategy?(Michael E. Porter)
We know , Operational effectiveness means performing the activities required for producing a product or delivering a service better—that is, faster, or with fewer inputs and defects—than rivals. Companies can reap enormous advantages from operational effectiveness (as illustrated by the example of Japanese firms). But from a competitive standpoint, the problem with operational effectiveness is that best practices are easily emulated. Such competition , hence leads to an absolute improvement in operational effectiveness due to creation of better processes and reduction of cost, but relative improvement for no one.
Then comes the need of Strategy. Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways. The article explores the three basic principles which underlie the foundation of Strategic Positioning : creation of a unique and valuable position, involving a different set of activities , make trade-offs in competing—to choose what not to do , creating “fit” among a company’s activities.
The article is divided into five progressive headings. We will discuss each one of them in depth.
1.Operational Effectiveness Is Not Strategy: This section lays emphasis on the fact that Operational Effectiveness is important for the organization. However, it is a Necessary but not a sufficient condition to help organizations scale height of success. Along with it, Strategy plays a crucial role. Both of them work in different ways and serve different purposes. A company can outperform rivals only if it can establish a difference that it can preserve. Being “different” is the mantra. Every company has to create its unique selling proposition. OE competition just shifts the productivity frontier outward, effectively raising the bar for...
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