Essay on What Is Strategy
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 …show more content…
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.
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'