Michael Porter's What Is Strategy? Vocabulary Flashcards

Key vocabulary terms and definitions from Michael E. Porter's article What Is Strategy?

Operational Effectiveness

Performing similar activities better—faster, or with fewer inputs and defects—than rivals.

Strategic Positioning

Performing different activities from rivals, or performing similar activities in different ways, to achieve a sustainable competitive advantage.

Productivity Frontier

The maximum value a company can deliver at a given cost, using the best available technology, skills, management techniques, and purchased inputs.

Competitive Convergence

The outcome of extensive benchmarking and imitation where competitors become increasingly indistinguishable from one another.

Variety-Based Positioning

Strategic positioning based on producing a specific subset of an industry's products or services rather than targeting particular customer segments.

Needs-Based Positioning

Strategic positioning based on serving most or all of the needs of a specific group of targeted customers.

Access-Based Positioning

Strategic positioning based on segmenting customers who are accessible in different ways due to geography, scale, or required activity configurations.

Straddling

An attempt by a competitor to match the benefits of a successful strategic position while maintaining its existing position by grafting new features or activities onto its current operations.

Trade-offs

Incompatibilities between competitive activities that occur when more of one thing necessitates less of another, requiring choices and protecting against imitators.

First-Order Fit

Simple consistency between each functional activity and the company's overall strategy.

Second-Order Fit

A state where discrete organizational activities reinforce one another.

Third-Order Fit

An alignment of activities that goes beyond reinforcement to achieve optimization of effort across functions.

Activity-System Map

A visual diagram showing how a company's strategic position is realized through higher-order strategic themes implemented via clusters of tightly linked activities.

Strategic Continuity

Maintaining a consistent strategic position over a long horizon, allowing an organization to build unique capabilities and strengthen activity fit.