What Makes a Good Strategy: An Article Analysis

Harlyne Diane B. Zapanta                                                                 February 14, 2019

What Makes a Good Strategy: An article analysis

on “What is Strategy?” by Michael Porter

The rapid changing of markets and technologies in this era cause the businesses to reject the concept of positioning since according to the new perception that competitors can now easily copy any market positioning and that any competitive advantage that they have is fleeting. Although a lot tools and techniques have been developed for search of better productivity, quality, and speed, numerous companies are still frustrated because they still cannot transform those so called tools and techniques into sustainable profitability. It was found that the root cause of this problem is the failure to differentiate operational effectiveness from strategy.

Operational effectiveness means that the company should execute better than their competition in the activities that are similar to the both of them. It also refers to the how the company utilize their resources. The differences in operational effectiveness between companies are somehow universal. There are companies who are able to maximize their inputs since wasted efforts are now eliminated and they also use advanced technology which prompts the workers to do better in their respective jobs. The peak of operational effectiveness happened in the 1970s and 1980s which was revolutionized by the Japanese. They established concepts such as total quality management and continuous improvement which led to them enjoying substantial cost and quality advantage for so many years.

As time goes by, the need for constant improvement of what operational effectiveness really mean is inevitable. Companies now seek more ways to reach what is called superior profitability. With the competition getting more neck to neck, it has in some way shifts the operational effectiveness outward which effectually raises the bar for everyone in the industry. Years of remarkable advances in operational effectiveness causes many companies to face diminishing returns. Managers are so focused on continuous improvement that the tool they use inadvertently drive them to imitation or homogeneity.

Strategic positioning, on the other hand, refers performance of activities that is different to their competitor or doing the same activities but are effected in a different manner. There are three principles that underlie strategic positioning. First is that strategy is the creation of a unique and valuable position which involves a different set of activities. It is important to choose activities that are different or performing activities that is not similar to that of their competitors for an idea to have an edge and not just become a marketing prospect that cannot withstand the competition. Southwest for example, positions their company as the airline that “serves price-and-convenience-sensitive travelers”. Ikea also has a clear strategic positioning which is that they target the young consumers who wishes for their furniture to be stylish but at a low cost. For these strategies to work, both companies have tailored their activities to be different from that of their competitors.