Essay on What Is Strategy

10784 Words Apr 15th, 2011 44 Pages
Record: 1
What Is Strategy? Authors: Porter, Michael E.1 Source: Harvard Business Review; Nov/Dec96, Vol. 74 Issue 6, p61-78, 18p, 1 Black and White Photograph, 3 Diagrams, 1 Graph
Document Type: Article
Subject Terms: *STRATEGIC planning *ORGANIZATIONAL effectiveness *MARKET positioning *COMPETITION *BUSINESS planning *INDUSTRIAL management *ORGANIZATIONAL change *PERFORMANCE -- Management *BUSINESS models *BUSINESS enterprises

Abstract : : Today's dynamic
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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, or do both. The arithmetic of superior profitability then follows: delivering greater value allows a company to charge higher average unit prices; greater efficiency results in lower average unit costs.

Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell, and deliver their products or services, such as calling on customers, assembling final products, and training employees. Cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors. Similarly, differentiation arises from both the choice of activities and how they are performed. Activities, then, are the basic units of competitive advantage. Overall advantage or disadvantage results from all a company's activities, not only a few.[1]

Operational Effectiveness (OE) means performing similar activities better than rivals perform them. Operational effectiveness includes but is not limited to efficiency. It refers to any number of practices that allow a company to better utilize its inputs by, for example, reducing defects in products or developing better products faster. In contrast, Strategic Positioning means performing different activities from rivals'

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