The Summary of "What Is Strategy" from Michael Porter

1496 words 6 pages
What Is Strategy? (To make a summary of the article while answering the question, the answer directly related to the questions are highlighted ) 1. Achievements Neutrogena has established itself in the soap market through variety-based positioning. Michael. Porter defines strategic position as attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways. He maintains that strategic position emerges from three distinct but not mutually exclusive and often overlapped sources, ie: variety-based positioning, needs-based positioning and access …show more content…
In fact,if there are no trade-offs companies will never achieve a sustainable advantage. They will have to run faster and faster just to stay in place. Strategy is making trade-offs in competing. So the essence of strategy is choosing what not to do.Without trade-offs, there would be no need for choice and thus no need for strategy. Any good idea could and would be quickly imitated. Again, performance would once again depend wholly on operational effectiveness 3. How did Neutrogena design strategy fit Positioning choices determine not only which activities a company will perform and how it will configure individual activities but also how activities relate to one another. Fit is important because discrete activities often affect one another. First-order fit is simple consistency between each activity (function) and the overall strategy. Second-order fit occurs when activities are reinforcing. Third-order fit goes beyond activity reinforcement to what is called optimization of effort. Neutrogena use the second order fit. It markets to upscale hotels eager to offer their guests a soap recommended by dermatologists using its customary packaging. Once guests have tried Neutrogena in a luxury hotel, they are more likely to purchase it. Thus Neutrogena’s medical and hotel marketing activities reinforce one another, lowering total marketing costs. The more a company’s positioning rests on activity systems with second- and

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