Question

Fully explain the statement/quote (from Porter’s article, What is Strategy) below and why it is true. In your answers, please explain what is meant by fit and sustainability. I want you to explain the quote as if you were informing those top managers around you in order for them to realize how your company is going to achieve true competitive excellence and not settle for mediocrity. Explain the quote in a real practical, business way.

“Strategic fit among many activities is fundamental not only to competitive advantage but also to the sustainability of that advantage.”

Answer 1

" Constant improvementimprovement in operational effectiveness is necessary to achieve superior profitability. However, it is not usually sufficient. Few companies have competed successfully on the basis of operational effectiveness over an extended period, and staying ahead of rivals gets harder every day.”

I believe the statement to be true. I also believe that in this statement Porter attempts to convey that while operational effectiveness is important, it is only one piece of the overall sustainable success of any organization. And here’s way I say that…

Porter defines operational effectiveness as a means of performing complementary operational activities better than your competitors, which will allow you to produce quality products and/or services faster, more efficiently, and with less use of coveted resources. It’s because of this definition that many top managers have lost their creative edge and strategic prowess, and simply attribute organizational success and profitability only to operational effectiveness. But as the article mentioned, the best practices that go into operational effectiveness are easily emulated, or better yet imitated. Benchmarking has plays a significant role in understanding the competition and keeping tabs on industry “best practices. Imitating the best practices of the top industry leaders has often become an industry “best practice”, “no pun intended”, so as competition between rivals intensify, competitive convergence become more and more apparent. This results in an outward shift of the productivity frontier, with all parties involved ending up winning, initially. Whereby, the organization is able to efficiently use available resources while at the same time maximizing value and delivering lower cost simultaneously. And the customer on the receiving end is able to have their choice of high quality of products and/or services that are competitively priced. Sounds like a win-win for both right? Problem is that this practice is not sustainable in the long run. And that’s because competitors can quickly imitate best practices at a much faster rate nowadays, so staying ahead of rivals gets harder each day.