Harvard Business Review: 1996: What Is Strategy: Effectiveness And Strategy

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Micheal E Potter: 1996 (What is Strategy, Harvard Business Review) has define strategy by using five concepts. Each statement can be summarized as below:
1. Operational effectiveness is not strategy.
According to M E Potter: 1996 Operational effectiveness and strategy are both essential to chive superior performance, which is the primary goal of any organization. Operational effectiveness is about performing similar activities better than competitors. It refers to any number of practices that allow the organization to better utilize its inputs. In the other hand strategic position is about performing different activities from competitors or performing similar activities in different ways. But the organizations have been failed to achieve sustainable
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Strategy rests on unique activities.
Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. And also he has states that the “choosing activities to perform differently than competitors’ do as the essence of strategy”. If not strategy is nothing more than a marketing slogan that will not withstand competition.
The origins of strategic positions.
Strategic positions emerge from three distinct sources based on customer’s needs, accessibility, or the variety of a company’s products or services. M E Porter: 1996 has define them as follows:
I. Varity based positioning- based on the choice of product or service varieties rather than customer segments. This can make economic sense when a company can best produce particular products or services using distinctive sets of activities.
II. Needs based positioning- This is closer to traditional thinking of targeting a segment of customers and it arises when there are group of customers with different needs and when a trailered set of activities can serve those needs best.
III. Access based positioning- This is about segmenting customers who are accessible in different ways. Though there needs are similar to other customers, the best configuration of activities to reach them is
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Inconsistencies in image or reputation.
II. Tradeoffs arise from activities themselves.
III. Tradeoffs arise from limits on internal coordination and control.
Therefore M E Porte: 1996 has stated that tradeoffs are essential to strategy as they are creating the need for choice and purposefully limit what a company offers.
4. Fit drives both competitive advantage and sustainability
Fit locks out imitators by creating a chain that is as strong as its strongest links. Simply fit means that poor performance in one activity will degrade the performance in others, so that weaknesses are exposed and more prone to get attention. For an example, cost of an activity can be decreased due to performance of another activity. Or particular activities value to customer can be enhanced by another activity. That’s how strategic fit bring advantages and competencies to an organization. M E Porter: 1996 has mentioned three types of fits as follows:
I. Simple consistency between each activity and overall strategy.
II. Occurs when activities are reinforcing.
III. Optimization of effort.
Fit and sustainability
Competitive advantage grows out of the entire system of activities. The fit among activities substantially reduce cost or increases differentiation. Therefore strategic fit is essential not only to gain competitive advantages but also to the sustainability of that

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