understanding michael porter summary
If you have a real competitive advantage, compared with rivals, you operate at a lower cost, command a premium price, or both. War and sports are unidimensional and imply one victor. To understand competitive advantage it is crucial to zoom in on activities, which are narrow then functions such as marketing, logistics etc…. Remember Goodharts law – chasing a specific measure makes it cease to be a useful measure. When activities are inconsistent, they cancel each other out. – What disruptive innovation really is and how to identify it. This has led to success of price comparison sites to facilitate this new reality. Growth or market share: the game is not to be the biggest in the industry. Products or services that meet the same basic need as the industry’s in a different way, caps industry profitability. If youâre servicing the same customers, with the same needs, at the same price, you donât have a strategy. Each choice should enhance value of others. Harvard Business School Background Note 707-493, December 2006. If you see a good idea or innovation think about if it can reinforce your value chain or can be tailored to your strategy. Contact the customer directly instead of through a distributor. Flexibility causes an organisation that doesn’t stand for anything, a company needs direction. Continuity strengthens a companyâs position in three ways: It takes years to implement a strategy. Industry structure determines profitability much more than growth (industry) tech etc.. Less obviously, itâs possible to be stuck in the middle - if you try to be too many things, youâll be outflanked by cost leaders on one side (who are âjust good enoughâ) and by differentiators on the other side (who satisfy... Trade-offs are strategic forks in the road. Understanding Michael Porter will enable all leaders throughout any organization to grasp Porter's seminal ideas about competition and strategy and deploy them to achieve competitive success. Prime Example: Airplane flights have been commoditised so the customer has been framed to shop for lowest price. This book, by the legendary Michael Porter, has redefined how Fortune 500 companies formulate strategy and has become essential reading in top MBA programs worldwide. For more than three decades, Harvard Professor Michael Porter has been developing and refining the essential frameworks that explain how competition works and its implications for strategy in business, government, and society. Understanding Michael Porter sets the record straight, providing the first concise, accessible summary of Porter’s revolutionary thinking. Theyâre also engaged in a struggle for profits with all the other players in the ecosystem - like customers, who would always like to pay less and get more, and are eager to substitute a product for a better alternative. A best hamburger? The Five Forces analysis suggests the profitability of an industry, but it does not automatically suggest how you should operate in the industry to maximize profits. In reality, strong strategies are built on many unique activities that fit together to deliver the unique value proposition. Which of your customersâ needs are you going to meet? For Porter differentiation is where you are able charge a higher relative price. It is accurate to the original Porter material. Once something becomes a commodity power shifts to customer. Read on the go with our iOS and Android App. The value chain looks internally on operations. More often, industries compete fiercely to control the one key âresourceâ - distribution channels, product portfolios - thus driving up cost. Strategy is implicitly a bet that the chosen customers or need and the essential trade-offs for meeting at the right price will be enduring. A clash between business titans is dramatized to the conflict between nation-states or to a national sports championship. Trade-offs force you to limit your value proposition. In business, your default thought should not be âhow do I win this market,â but rather âwhich segment of the industry can I service well?â. To what extent does it invalidate important traditional advantages? Donât worry too much about the differences in the new market. Likewise, a company can focus on a demographic and serve most of their needs. Can this competency or ability be applied elsewhere? A good strategy is a set of activities that achieves competitive advantage.
Stanford University Online Admissions, Skyrim Best Crossbow, Dark King Real Injector, Titanic: The Legend Goes On Original, Chickpea In Amharic, Cape Vincent Hotels, R License Plate Manitoba,