ASSIGNMENT I: Summary of Micheal Porter’s What is Strategy

SUBJECT: Strategic Marketing

STUDENT INFORMATION

Student Name: Kamran Rauf

Student ID: F23MBA103

Semester: Fall 2023

Program: Master of Business Administration

University: Salim Habib University

Last company: Pirani Group of Companies

PRESENTED TO

Teacher’s Name: Sir Umair Saeed

Subject: Strategic Marketing

Date of Submission: Thursday, November 16th 2023

Due date: Sunday November 19th 2023

ASSIGNMENT I: Summary of Micheal Porter’s What is Strategy
SUBJECT: Strategic Marketing

After reading the article of Micheal Porter’s “What is Strategy” and he had told the world
the strategy is not alone Operational Effectiveness, because it is not a unique activity and
the competitors can copy your operational effectiveness things. Strategy is a creation of
unique and valuable position in the marketplace by doing three things:

1. Positioning:
2. Tradeoff
3. The Right Fit

1. Positioning: A company can outperform its rivals and maintain its competitive
advantage only it can establish a difference in activities that it can uniquely do and
improve over the time. The positioning must be done in the listed three ways for
the clients

1.1 Variety base positioning A firm produces a subset of an entire industry’s products
or services. It thus chooses to not segment itself by the customer, but instead
through the choice of offering. Example: Jiffy Lube, Vanguard & IBA’s EMBA
degree.

1.2 Need base positioning: It arises when you address the needs of a complete
segment. A firm practicing this would serve most or all the requirements of a
particular group of customers. Example Citi Bank, Bessemer Trust, IKEA & Bykeya.

1.3 Access base positioning: It does define making your product or service available
to potential customers in a way that is convenient and easy for them. Example:
Amazon, Nike & Foodpanda.

2. Tradeoff: It does occur when activities are incompatible more of one thing
requires less of another are essential in effective strategy: creates need to choose
and purposefully limit what a company offers deters straddling or repositioning of
rivals as competitors that engage in these activities undermine current strategies,
degrade value of existing activities, and spread resources too thin (trying to be all
things to all customers) and also tradeoff rise for the following causes
 Inconsistencies in image or reputation
 Different positions require different activity set
ASSIGNMENT I: Summary of Micheal Porter’s What is Strategy
SUBJECT: Strategic Marketing
 Internal focus requires priority setting - can’t be all things to all customers
successfully.

3. The Right Fit: it is seeing the company as a system not just a collection of core
competencies, critical resources, and key success factors. It does broke in the
three types of fits,

3.1. First-order fit: Simple consistency between each activity (function) and the overall
strategy. Consistency ensures that the competitive advantages of activities cumulate and
do not erode or cancel themselves out. Further, consistency makes it easier to
communicate the strategy to customers, employees, and shareholders, and improves
implementation through single-mindedness in the corporation.

3.2. Second-order fit: Occurs when activities are reinforcing.

3.3. Third-order fit: Goes beyond activity reinforcement to what Porter refers to as
optimization of effort. Coordination and information exchange across activities to eliminate
redundancy and minimize wasted effort are the most basic types of effort optimization.

In all three types of fit, the whole matters more than any individual part. Competitive
advantage stems from the activities of the entire system. The fit among activities
substantially reduces cost or increases differentiation. Moreover, according to Porter,
companies should think in terms of themes that pervade many activities (i.e., low cost)
instead of specifying individual strengths, core competencies or critical resources, as
strengths cut across many functions, and one strength blends into others.

What not to do

1. Failure to choose:
a) Macho Manager ( compete all avenues)
b) Chase technology for own sake
c) Seduced by Ops excellence such as actionable, measurable, concrete etc.
d) Hard mentality to follow or reach based on competitor action.

2. Straddling:
a) When you see non complementary activities then avoid them.
b) You end up making tradeoff and compromises.
ASSIGNMENT I: Summary of Micheal Porter’s What is Strategy
SUBJECT: Strategic Marketing

3. Growth Trap:
a) Make several compromises and inconsistencies to launch early.
b) Acquire to grow to increase revenue at cost of margin.
c) Dilutes focus and moves scares resources into non unique areas.

What to do
 Focus on your uniqueness and improve your fit.
 Define communicate unique position of the company.
 Make tradeoff and avoid distractions.
 Strive for operational excellence to operate on Productivity frontier
 Organization design supporting fit, help make it stronger, it’s 7-10 years decision.