1. What are the basic ways to develop competitive advantage? 2. Try to link each competitive strategy to the value chain analysis. That is, what are the key differences in the value chain if different...

www.hbr.org What Is Strategy? by Michael E. Porter Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 What Is Strategy? 21 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications Reprint 96608What Is Strategy? The Idea in Brief The Idea in Practice Three key principles underlie strategic positioning. The myriad activities that go into creating, producing, selling, and delivering a product 1. Strategy is the creation of a unique and 3. Strategy involves creating “fit” among a or service are the basic units of competitive valuable position, involving a different set company’s activities. Fit has to do with the advantage. Operational effectiveness of activities. Strategic position emerges from ways a company’s activities interact and rein- means performing these activities better— three distinct sources: force one another. For example, Vanguard that is, faster, or with fewer inputs and Group aligns all of its activities with a low-cost defects—than rivals. Companies can reap • serving few needs of many customers (Jiffy strategy; it distributes funds directly to con- enormous advantages from operational ef- Lube provides only auto lubricants) sumers and minimizes portfolio turnover. Fit fectiveness, as Japanese firms demon- • serving broad needs of few customers drives both competitive advantage and sus- strated in the 1970s and 1980s with such (Bessemer Trust targets only very high- tainability: when activities mutually reinforce practices as total quality management and wealth clients) each other, competitors can’t easily imitate continuous improvement. But from a com- them. When Continental Lite tried to match a petitive standpoint, the problem with oper- • serving broad needs of many customers few of Southwest Airlines’ activities, but not ational effectiveness is...