What is strategy?

“What business strategy is all about is, in a word, competitive advantage… The sole purpose of strategic planning is to enable a company to gain, as efficiently as possible, a sustainable edge over its competitors. Corporate strategy thus implies an attempt to alter a company’s strength relative to that of its competitors in the most efficient way.”    Kenichi Ohmae, The mind of the Strategist

This definition of strategy looks more like a definition of an operational effectiveness. In different words it states that the company has to perform better then its competitors in any way it could possibly find. According to Porter, the main problem is failure to distinguish between operational effectiveness and strategy. Porter argues that most companies today compete on the basis of operational effectiveness. However few companies have competed successfully on the basis of operational effectiveness over an extended period, and staying ahead of rivals gets harder every day. The most obvious reason for that is the rapid diffusion of best practices. Competitors quickly can copy the management techniques and therefore this leads to a battle that no one can win. Operational effectiveness is about what's good for everybody and about what every business should be doing.

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Strategy is about making choices, trade-offs; it's about deliberately choosing to be different. The essence of strategy, according to Porter, is choosing to perform activities differently than rivals do. Strategy is the creation of a unique and valuable position, involving a different set of activities. Southwest Airlines Company is a great example of the unique service proved by the firm in order to survive in a competitive airline industry. It offers short-haul, low-cost, point-to-point service between midsize cities and secondary airports in large cities. It does not offer meals, assigned seats or other services which full-service airline do, however, they ...

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