michael porter strategy
TRANSCRIPT
STRATEGY !!!
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MICHAEL
E.
PORTER
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LIFE : MICHAEL PORTER
Born: May 23, 1947,
BSE : Mechanical and Aero Engineering, Princeton
MBA : Harvard Business School (1971)
George F Baker Scholar
PhD : Business Economics , Harvard University (1973)
Bishop William Lawrence University Professor
Institute for Strategy and Competitiveness
Fellow Member of the Strategic Management Society
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18 Honorary Doctorates
Six time winner of McKinsey Award : Best HBR article of the year
Irwin Outstanding Educator Award - Academy of Management
Adam Smith Award : Distinguished Contribution in the Field of
Management
Fellow of Royal Society of Edinburgh
John Kenneth Galbraith Medal - American Agricultural Economics
Association
Academy of Management Career Achievement Award -Distinguished Scholarly Contributions to Management
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AWARDS : MICHAEL PORTER
Intellectual Leader in Modern Competition and Strategy Objective Focus: How Firms and Nations can build
Competitive Advantage and Strategy Redefined Thinking about:
Competitiveness Economic development Economically distressed urban communities Environment policy Role of Corporations in Society
18 Books and 125 articlesCompetitive StrategyCompetitive Advantage of NationsOn competition
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MICHAEL PORTER: CONTRIBUTIONS
Competitive Advantage: Lower Cost or Differentiated
Porter’s Five Forces: Profitability and Attractiveness
Strategic Groups: Grouping Companies with similar Business Model or Strategy
Value Chain: Organizational Activities
Market Positioning: Variety, Need and Access Based
Porter’s Clusters: Regional Economic Development
Diamond Model: Nations are Competitive
Porter’s Four Corners Model: Predictive tool for a Competitor’s course of Action.
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MICHAEL PORTER: STRATEGIC SYSTEM
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STRATEGY : HOW AN ORGANIZATION IS GOING TO WIN
COMPETING TO BE THE BEST
COMPETING TO BE UNIQUE
The worst error in strategy is to compete with rivals on the same dimensions.
• Strategy is different that aspirations– Our strategy is to be #1 or #2
– Our strategy is to grow
• Strategy is more than a particular Action– Our strategy is to merge.
– Internationalize
• Strategy is not Vision/Values– Our strategy is to meet the aspiration of customer
– Serve community
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WHAT IS MEANT BY STRATEGY?
Strategy defines the company’s distinctive approach to competing and the competitive advantage on which it will be
based.
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ECONOMIC FOUNDATIONS OF STRATEGY
INDUSTRY STRUCTURE
STRATEGIC POSITIONING WITHIN
THE INDUSTRY
STRATEGIC THINKING MUST ENCOMPASS BOTH THE AREAS. COMPANIES MUST ALSO FOCUS ON THE HEALTH OF THE INDUSTRY,
AND NOT JUST ON THEIR OWN POSITION.
Intra-
Industry RivalryStrategic Business
Unit
How strong is the rivalry among existing
players? Does only one player dominate?
Bargaining
Power of the
Buyers
How strong is the position
of the buyers? Can we sell
in large volumes? Do we
need to discount heavily?
How easy or hard it is for new entrants to start and compete? Any barriers to their
entry?Potential New Entrants
How easy or hard it is for
a new product or service to replace what already exists?
Substitute Products
and Services
Bargaining
Power of Suppliers
How strong is the position of the
suppliers? Are there many? Few?
Monopoly?
PORTER’S FIVE FORCES…
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WHAT CREATES A SUCCESSFUL STRATEGY?
FIRST STEP: A UNIQUE VALUE PROPOSITION OR DIFFERENTIATOR3 QUESTIONS
•What customers are you going to serve?•What needs will be met?
•What price will be charged?
SECOND STEP: DISCTINCTIVE VALUE CHAINValue chain is a framework to see the firm as a chain of activities.
Value chain has to be uniquely good to achieve unique distinction.
THIRD STEP: TRADEOFFMaking a clear tradeoff and choosing what to do and what not to do.
“Willingness to make consumers unhappy”
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SOUND STRATEGIC THINKING
COMPANIES HAVE TO SAY NO.NOT NECESSARY FOR WHOLE TEAM TO AGREE ON
STRATEGY.STRATEGY IS NOT ABOUT CONSENSUS, ITS ABOUT MAKING
CRYSTAL CLEAR CHOICESDO NOT TOLERATE DOUBTERS
CLARITY ABOUT WHAT WE ARE GOING TO DO, AND WHAT WE ARE NOT GOING TO DO
LESS THAN HALF THE COMPANIES HAVE A CLEAR STRATEGY.
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“The underlying principles of strategy are enduring, regardless of technology or the pace of change.”
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THANK YOU
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VALUE CHAIN