review the article What is strategy? by Michael .E. Porter
Michael Eugene Porter is a Professor at The Institute for Strategy and Competitiveness, based at the Harvard Business School. He is generally recognized as the father of the modern strategy field. One of his great writing is “What is strategy?” published in 1996.
The beginning of the article raises a mistake of Operational Effectiveness for Strategy that many companies had suffered for almost two decades. In the article, Operational Effectiveness means performing similar activities better than rivals perform them. To achieve this objective, companies based on its strength using their best available technologies, skill, management, human resource, eliminated wasted effort, motivated employees… As the result of this, they could offer lower cost but superior quality to the customers meanwhile moving toward the frontier. In this case, customers and suppliers received a lot of benefit. But for the companies the fast and dramatic profit they received at the early time day by day became nothing. They just run faster and faster in the endless race of Operational Effectiveness, no one could win. One of the reasons for this is so irony. Competitors imitated the best practices in technology, management, input improvement. Therefore most of the companies look nearly the same. There were no difference and competitive advantage anymore and the sinking price ever nearer to marginal cost. We can see it clearly in mobile phone market; Samsung is facing with the imitation from Chinese companies for example Xiaomi. Those new entrants put a heavy threat on market share and made Samsung lose a lot of money.
By finding out and describe the matter really clearly, this article has shown the conflict in operating the companies. Managers have tried to get the better but receive the worse. It explains why many companies got stuck in their management trap for almost twenty years. To make it clearer, a very typical example falls into Japanese companies which imitated and emulated one
The beginning of the article raises a mistake of Operational Effectiveness for Strategy that many companies had suffered for almost two decades. In the article, Operational Effectiveness means performing similar activities better than rivals perform them. To achieve this objective, companies based on its strength using their best available technologies, skill, management, human resource, eliminated wasted effort, motivated employees… As the result of this, they could offer lower cost but superior quality to the customers meanwhile moving toward the frontier. In this case, customers and suppliers received a lot of benefit. But for the companies the fast and dramatic profit they received at the early time day by day became nothing. They just run faster and faster in the endless race of Operational Effectiveness, no one could win. One of the reasons for this is so irony. Competitors imitated the best practices in technology, management, input improvement. Therefore most of the companies look nearly the same. There were no difference and competitive advantage anymore and the sinking price ever nearer to marginal cost. We can see it clearly in mobile phone market; Samsung is facing with the imitation from Chinese companies for example Xiaomi. Those new entrants put a heavy threat on market share and made Samsung lose a lot of money.
By finding out and describe the matter really clearly, this article has shown the conflict in operating the companies. Managers have tried to get the better but receive the worse. It explains why many companies got stuck in their management trap for almost twenty years. To make it clearer, a very typical example falls into Japanese companies which imitated and emulated one