Porter’s 5 Forces

In Porter’s view, currently, many companies struggling between the real strategy and operational effectiveness. They lost themselves in how to imitate other companies’ successful experience and forget the real direction. In my opinion, operational effectiveness is just a tool that can help a certain company to improve themselves on a certain level of the whole industry, but not the method to be different from others. Such activities could lead to unhealthy competition in the industry and zero-sum game. It’s just like the real world life, rare resources are always the key to success, if everyone do the same job, imitate from each other, then everyone would be the same., no one could really success. At this time, when someone stand out and do something different, they always could benefit from this activity. We can take Lady Gaga as an example, her voice may not as good as other famous singers, however, her performance is so different and some kind of wired, what the young people love to watch. Iphone is another good example. When Nokia and Samsung are fighting for the price and the quality, Apple developed the epoch-making IOS, which makes the phone smart. This strategy is proved to be very successful. Additionally, the raise of smart phone with camera take the market share of traditional digital camera, which lead Kodak bankrupt, the reason is that they only focused on the operational effectiveness and ignored the strategy.

How to balance operational effectiveness and strategy is a kind of art, which is not easy to handle. In my opinion, in order to chase short-term goal, following the leading competitor and focus on the operational effectiveness is very important, which can at least help a company hold the current market share. However, strategy is the key for a company to gain success for long-term. I would like to take the last company I served for an example, F Motor Group. In 1970, after the reform and opening-up policy issued by the Chinese government, agricultural vehicle (only have 3 wheels) is very needed at that time. Many companies entered in the agricultural vehicle industry, F company is one of them. At the beginning, everything is good, consumer demand is huge and the market is booming. However, Mr.W, the founder of F company, realized that as the developing of China, agricultural vehicle industry will not keep the same increasing rate. So he decided to change the strategy, focus on the commercial vehicles, light duty truck. As he said, light-duty truck only have one more wheel than the agricultural vehicles, why can not we made that? So F company turned to make light duty truck which has almost no competitor at that time. This strategy changing action built the foundation of today’s success. Now F company is the largest commercial vehicle manufacturer in China.