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What is strategy?- Michael Porter (1978) (OPERATIONAL EFFECTIVENESS VS…
What is strategy?- Michael Porter (1978)
OPERATIONAL EFFECTIVENESS VS STRATEGY
Strategy
Differentiating the organization from the rival by doing different activities, or employing different manners of doing so
Operational effectiveness
Performing in a better way than the competition, but in similar activities
Problems with the confusion
Competition In the market is based on OE
Homogeneity
Diminishing returns
Static prices
No sustainability
Japan (1970-1980's)
PILLARS OF STRATEGY
Unique activities
Positioning
Variety-based
Product or service varieties
Needs-based
Serves most/all necessities of clients
Access-based
Segmenting customers
Making different choices than the competition
Trade-offs
More of one thing necessitates less of another
Choosing what not to do
Fit
Thinking about activities as a whole
Finding relationships between elements
Kinds
First order
Consistency
Second
Reinforcement
Third
Optimization
Integrating and making sense of all the organization's elements
Time
Requires more than one planning cycle
Planning horizon: 10+ years
CONTINUITY
Managerial aspects
Leaders must learn to choose
What to do
What not to do
Blind/irrational desire for growth
Small changes
Homogeneity
Static
Focus on deepening strategy, not widening it