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The starting point of Porter (1996) emphasizes in the aggressively growth of the
market, due to the continuous sudden appearance of new technology and
necessities. The new dynamics and the increase of potential demand has made
the business and industrial sector a hypercompetitive place where everyone wants
to stand out at all cost. However, many companies, worried about the present,
have decided taking decisions at short or medium term and try hard to advantage
the rivals by playing the same game, but at this point the writer is emphatic:
competitive advantage is, at best, temporary () [and] has led more and more
companies down the path of mutually destructive competition.
2. A company can outperform rivals only if it can establish an advantage that it can
preserve.
3. The essence of strategy is choosing to perform activities differently than rivals do.
Starting from the base: competitive strategy is about being different Porter
exhorts companies to focus on a few group of activities, thus stepping up profits.
There are several aspects in which a company can center on: Variety (which is do
what you do best), costumers needs, access (segmenting clients into distinct
classes) or a combination of them. Otherwise, the company would fall into the
operational effectiveness war.
A usual problem that a company with no strategy undergoes, are the imitators:
those who reposition themselves or take an idea or machine to get the benefits of
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Alejandro Aristizbal Snchez 201510014004
Porter (1996) argues that sometimes trade-offs and limits appear to constrain
growth () [and] a well-run company should be able to beat its ineffective rival on
all dimensions simultaneously and seeing it as a weakness when running a
company is a self-defeating mental model. He furthermore states: Trade-offs are
frightening, and making no choice is sometimes preferred to risking blame for a
bad choice and points out that [the failure] sometimes comes down to the
reluctance to disappoint valued managers or employees. Finally, the most
common reason expressed by the author is that when profits fall, more revenue is
seen wrongly as the answer.
7. The leader must provide the discipline to decide which industry changes and customer
needs the company will respond to.
The writer branches the leaders strategic function into defining a companys
position, making trade-offs, and forging fit among activities. The author focalizes
on the easiness of getting lost in the strategic convergence and imitations woods.
He does not mean never look at the competence and make it by yourself. A period
of imitation may be inevitable in emerging industries, but that period reflects the
level of uncertainty rather than a desired state of affairs, reinforcing his point on
the need of a conscious manager to () distinguish operational effectiveness
from strategy agenda [and] guide the company to sustainable advantage.
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Alejandro Aristizbal Snchez 201510014004
Although the author displayed a plausible work exposing his ideas through daily-life
examples and a rigorous characterization, he lacked order and reading through that mix
of inconclusive cases with repetitive ideas was not as easy as expected of an informative
text.
He could have added an appendix and exposed the cases more widely there, giving more
space to order logically the ideas, which would have made the apprehension simpler.
Furthermore, those few overexposed ideas continuously hid many writers important
arguments, accentuated by the absence of a conclusive paragraph.
C) DISCUSSION
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Alejandro Aristizbal Snchez 201510014004
Both are important, otherwise ask Jeff Bezos, whose net worth has grown by more than
$65 billion over the past five years and has investments in a wide range of companies
(Amazon, The Washington Post, Whole Foods, etc.)1 unnecessarily connected.
Regarding scale economy, last years have proved that this is not the answer neither for
B2B businesses (stock prices are high) nor B2C ones (people do not usually buy goods
for more than a week or two). Another thing that Porter overlooked was that, as seen in
class, if a company works close to the productivity frontier any changes in the market will
affect its incomes, for example, if a client needs more than usual, you could not
accomplish that order.
Finally, long term strategies have shortened because of the dynamics of the market but
Porters vision of trade-offs necessity is still befitting. In our country is seen in retailers
(carulla-D1), airline companies (Avianca-VivaColombia), etc. But also in the world
(Chinese-Japanese products); a few years ago, Volkswagen was the king: its vehicles
would offer not only power but were environmentally friendly. Then, when caught cheating
they lost an invaluable thing: reputation. And that is it, you cannot offer all but you can do
your best at your stronger point.
REFERENCES
1 http://www.businessinsider.com/jeff-bezos-sprawling-empire-in-one-chart-2017-6