Michael Porter

2526 Words11 Pages
I. Operational Effectiveness Is Not Strategy
According to Porter, various management tools like total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, that are used today, do enhance and dramatically improve the operational effectiveness of a company but fail to provide the company with sustainable profitability. Thus, the root cause of the problem seems to be failure of management to distinguish between operational effectiveness and strategy: Management tools have taken the place of strategy.
Operational Effectiveness: Necessary but Not Sufficient
Although both operational effectiveness and strategy are necessary for the superior performance of an organization, they operate in
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It is economically feasibly only when a company can best produce particular products or services using distinctive sets of activities.
2. Needs-based positioning: Serves most or all the needs of a particular group of customers. It is based on targeting a segment of customers. It arises when there are a group of customers with differing needs, and when a tailored set of activities can serve those needs best.
3. Access-based positioning: Segmenting customers who are accessible in different ways. Although their needs are similar to those of other customers, the best configuration of activities to reach them is different. Access can be a function of customer geography or customer scale or of anything that requires a different set of activities to reach customers in the best way.
Whatever the basis-variety, needs, access, or some combination of the three-positioning requires a tailored set of activities because it is always a function of differences in activities (or differences on the supply side). Positioning, moreover, is not always a function of difference on the demand (or customer) side. For instance, variety and access positionings do not rely on any customer differences.
III. A Sustainable Strategic Position Requires Trade-offs
According to Porter, a sustainable advantage cannot be guaranteed by simply choosing a unique position, as competitors will imitate a valuable position in one of the two
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