What is Strategy?

Discussion Questions

Operational Effectiveness

1. What does Porter mean when he says that “operational effectiveness is necessary but not sufficient”?

Differences You Can Preserve

2. Explain what Porter means when he says, “A company can outperform rivals only if it can establish a difference that it can preserve.”

Operational Effectiveness and Activities

3. According to Porter, operational effectiveness means performing similar activities better than rivals. Is it possible to achieve a competitive advantage in this way? If so, how long will such an advantage likely last?

Productivity Frontier

4. What does Porter mean by a productivity frontier? Is it desirable for a company to seek to be at, or near, this frontier?

Productivity Frontier Over Time

5. What does operational effectiveness competition do to the productivity frontier over time?

Competing through Operational Effectiveness

6. Why then is it very hard to compete successfully solely on the basis of operational effectiveness over a long period of time?

Operational Effectiveness vs. Strategic Positioning

7. Contrast operational effectiveness with strategic positioning. In strategic positioning how would a company attempt to perform important similar activities relative to its rivals?

Competitive Advantage and Activities

8. Would a company seeking to establish competitive advantage focus exclusively on similar activities to those of its rivals? Explain.

Strategy and Continuous Improvement

9. According to Porter, continuous improvement (while desirable) can draw companies toward imitation and homogeneity. Does this contribute to strategies that differentiate a company from its rivals?

Strategy and Being Different

10. Porter claims that competitive strategy is about being different. What does he mean by this?

Strategy and Being Different: Southwest Airlines

11. What are some of the important ways Southwest Airlines utilized this idea?

Strategy and Being Different: IKEA Furniture

12. What are some of the important ways the IKEA furniture company utilized this idea?

Variety-Based Positioning

13. Variety-based positioning is based on offering only a subset of an industry’s products or services? How did Jiffy Lube’s business model demonstrate this?

Variety-Based Positioning

14. Do you think the I/S Division utilizes this? Explain?

Variety-based positioning is based on offering only a subset of an industry’s products or services?

Strategy Positions: CarMax

15. Porter points out that some strategy positions are already available to existing companies, but are exploited first by new entrants. He gives CarMax as an example. What activities relative to selling used cars did CarMax do differently than established car dealers?

Sustainable Advantage

16. Porter states: “Choosing a unique strategic position, however, is not enough to guarantee a sustainable advantage.” What is the main threat to achieving sustainable advantage?

Sustainable Positions and Tradeoffs

17. Porter asserts that strategic positions are not sustainable unless there are tradeoffs with other positions. What does this mean?

The Straddler Approach

18. The straddler seeks the success of a competitor and tries to imitate it while maintaining its existing position. Does this usually work?

How did this work for Continental Airlines with their Continental Lite service in its competition with Southwest?

Tradeoffs: Southwest Airlines

19. Porter claims that tradeoffs arise from the tailored activities that are chosen to enable a strategic position. Give examples of this from the Southwest Airlines example.

Tradeoffs: The I/S Division

20. Can you identify some tradeoffs the I/S Division makes by adopting the approach to leverage a fully integrated architecture?

Strategy and Combining Activities: Southwest Airlines

21. Porter makes the following statement: “While operational effectiveness is about achieving excellence in individual activities, or functions, strategy is about combining activities.”

Relate this to the Southwest Airlines strategy of rapid gate turnaround. In other words how does this relate to how Southwest performs other activities?

Strategy, Activities, and “Fit”

22. Porter discusses the need for fit among a company’s chosen activities. How do the various activity choices made by Southwest Airlines “fit” within their overall strategy?

Imitating Activities

23. How easy is for a competitor to imitate a single activity you might choose to do? What might this depend on? Explain.

Interconnected System of Activities

24. How does creating an interconnected system of activities relate to creating sustainable advantage?

Strategy and Internal Pitfalls

25. Porter asserts that the greatest threat to strategy often comes from within a company rather than from without. What does he mean by this? What is a common internal pitfall for creating successful strategy?

The Growth Trap: Maytag

26. What does Porter mean by the “Growth Trap”? How did this play out at Maytag?

Growth Trap and Profitability

27. How does understanding the growth trap help a company achieve more profitability?

Operational Effectiveness Revisited

28. Does Porter advocate ignoring an emphasis on operational effectiveness? Explain?

Leadership and Strategy

29. Why is leadership so important for establishing a clear strategy?

Strategy and Organizational Choices

30. How does strategy relate to organizational choices?

Leadership Alone?

31. Can leaders alone implement a successful strategy?