Michael Porter’s Basics of Strategy,

SWOT Analysis and Differentiating

Factors

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Sources of Competitiveness

Interna Extern
l al
Quality of
Company Operations
National Business
and Strategy
Environment

 Enhance/Use Clusters (Co-

 Find a Unique Niche
Operation)
 StayFocused - don’t  A cluster is a geographically
diversify, outsource non- proximate group of interconnected
core activities companies and associated
institutions in a particular field,
 Use Resources Productively linked by commonalities and
complementaries

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What is Strategy?

• Strategy is the
creation of a unique
and valuable position,
involving a different
set of activities
Strategy is a race (true sustainability arises when
to one ideal competitors do not want to imitate
because of tradeoffs - i.e.
position Incompatibilities between positions
that create the need for choice)

• Strategy is making
tradeoffs in competing
and choosing what
not to do

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The Fundamentals of Competitive
Strategy
 The central goal of a firm must be superior long-term risk-
adjusted return on investment (our employees’ pay is tied
to value creation)
 The fundamental unit of strategic analysis is the industry
 Company economic performance results from two distinct causes:

Relative Position
Industry
Within the
Structure
Industry
Rules of Competition Sources of Competitive
Advantage
XXX is focused on the We have positioned ourselves as a
lucrative XXX industry XXX specifically focusing on XXX

 Strategy must encompass both

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Strategy

What is a Strategy? What is not a Strategy?

 Unique Position  Best Practice Improvement

What do we do differently?  A Vision
 Tailored Activities  Learning
We focus on…  Agility
 Activities fit together in an  Flexibility
integrated system
It all comes together
 Innovation
 Clear Tradeoffs  Restructuring
What do we give that  Merger / Consolidation
increases a customer’s
switching costs?  Alliances / Partnering
 Continuity of position but  IT / The Internet
consistent improvement

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SWOT Analysis

 Strengths
 What are we good at?
 Weaknesses
 Where do we need improvement?
 Opportunities
 Where/What is the next big thing?
 Threats
 What can kill us?

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Target Customers

 ???
 Why them?

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Differentiators - Skills retention

 Focus on promoting team work

 Creating challenging environment with promised growth, i.e.
there must be rotation of job/section/environment
 On-going internal and external training
 Up to date subscriptions
 Sharing of information
 In-house training on IT as well as developing business acumen
 Performance recognition through bonuses and prizes (travel)
 Frequent “open door” communication with transparency
 Being empowered to make decisions
 Juniors & trainees require 70% development and growth while
seniors & specialists require 60% incentives

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 Through Transfer of
Skills
 Activities involved must be similar enough that sharing expertise
is meaningful
 That’s why we focus on XXX
 Skills must involve activities important to competitive
advantage
 Our core, in-house skills are critical to achieving our strategy
 Skills transferred must represent a significant source of
competitive advantage for the receiving unit
 Strategy-specific skills tend to be more valuable than those relating
solely to operational effectiveness
 Mechanisms must be put in place so that skills transfer actually
occurs
 Initial
 Ongoing

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Differentiators - General

 What are they?

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