What Is Porter Strategy

        Many companies do not have a strategy primarily due to the belief that continuous benchmarking would improve operational effectiveness and eventually, position them at competitive advantage. In his essay, Michael Porter believed otherwise.  He warned against generic strategies and competitive convergence. He also described the need for strategic positioning to achieve competitive advantage and its sustainability. He introduced three principles underpinning strategic positioning that includes the creation of valuable position, trade-offs and fit on a company’s activities.

        In Porter’s essay, distinctive core competencies are implied as resources/skills that discern a firm in the market. It is an important factor positioning a business ahead of its competitors. It is a component alongside key success factors that must fit with complementary activities fulfilling a company’s mission to improve profitability and competitive advantage. Competitive advantages are comprised of different activities that are driven by fit. Sustainable competitive advantage is the difference a company is able to create and preserve. It only occurs when basic activities or competitive advantages reciprocally strengthen one another making a strategy that is difficult to imitate by rivals. Complementary competitive advantages promote sustainability that differentiates a firm from other businesses in the same market.

        Porter expounded on the importance of having a unique strategy. He argued that generic strategies or solutions such as operational effectiveness (e.g. faster product development, decreased product defects) would not be able to create competitive advantage. Simply achieving efficiency is inadequate because generic solutions disperse rapidly particularly when these are applicable to multiple settings. Generic solutions also create competitive convergence wherein firms become impossible to differentiate from one another. Instead, strategic positioning through competitive strategy must be the goal. A competitive strategy is defined by being “different” whereas a different set of activities is performed to provide a distinctive mix of value. It is doing different activities/exerting different values or doing similar activities differently than competitors. Otherwise, such actions would only translate as a company tagline that will not be able to survive fierce market competition. An excellent example of a company with a competitive strategy includes CarMike cinemas. Unlike other movie theatre operators, CarMike cinemas operate solely on small markets, particularly on towns or cities with less than 200,000 populations.  They do things differently for their lean cost structure (e.g. inexpensive theatre rents, one theatre manager) saving CarMike costs thereby enabling them to gain profits from inexpensive ticket sales. It differentiates itself from its rivals through providing broad needs of many consumers in a relatively limited market. Other distinct sources of strategic positioning include serving several needs of many consumers and providing broad needs of few consumers.