What is Strategy?

For almost two decades, managers have been learning to play by a new set of rules. Companies must be flexible to respond rapidly to competitive and market changes. | What is Strategy by Michael E. Porter Harvard Business Review Reprint 96608 Harvard Business Review NOVEMBER-DECEMBER 1996 Reprint Number MICHAEL E. PORTER WHAT IS STRATEGY 96608 STEPHEN S. ROACH THE HOLLOW RING OF THE PRODUCTIVITY REVIVAL 96609 NIRMALYA KUMAR THE POWER OF TRUST IN 96606 MANUFACTURER-RETAILER RELATIONSHIPS JAMES WALDROOP AND TIMOTHY BUTLER THE EXECUTIVE AS COACH 96611 AMAR BHIDE THE QUESTIONS EVERY ENTREPRENEUR MUST ANSWER 96603 ROB GOFFEE AND GARETH JONES WHAT HOLDS THE MODERN COMPANY TOGETHER 96605 MICHAEL C. BEERS HBR CASE STUDY THE STRATEGY THAT WOULDN T TRAVEL 96602 THOMAS TEAL THINKING ABOUT. THE HUMAN SIDE OF MANAGEMENT 96610 ALAN R. ANDREASEN SOCIAL ENTERPRISE PROFITS FOR NONPROFITS FIND A CORPORATE PARTNER 96601 PERSPECTIVES THE FUTURE OF INTERACTIVE MARKETING 96607 ADAM M. BRANDENBURGER BOOKS IN REVIEW AND BARRY J. NALEBUFF INSIDE INTEL 96604 HBR NOVEMBER-DECEMBER 1996 I. Operational Effectiveness Is Not Strategy What Is Strategy For almost two decades managers have been learning to play by a new set of rules. Companies must be flexible to respond rapidly to competitive and market changes. They must benchmark continuously to achieve best practice. They must outsource aggressively to gain efficiencies. And they must nur ture a few core competencies in the by Michael race to stay ahead of rivals. Positioning-once the heart of strategy-is rejected as too static for today s dynamic markets and changing technologies. According to the new dogma rivals can quickly copy any market position and competitive advantage is at best temporary. But those beliefs are dangerous half-truths and they are leading more and more companies down the path of mutually destructive competition. True some barriers to competition are falling as regulation eases and markets become global. True companies have properly invested energy in becoming leaner and more nimble. In many industries however what some call hypercompetition is a self-inflicted wound not the inevitable

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