Michael Porter

1
Michael Porters Basics of Strategy, SWOT
Analysis and Differentiating Factors
E-mail info_at_scythian.biz Website
www.scythian.biz
2
Sources of Competitiveness
Internal
External
Company Operations and Strategy
Quality of National Business Environment

• Find a Unique Niche
• Stay Focused - dont diversify, outsource
  non-core activities
• Use Resources Productively

• Enhance/Use Clusters (Co-Operation)
• A cluster is a geographically proximate group of
  interconnected companies and associated
  institutions in a particular field, linked by
  commonalities and complementaries

3
What is Strategy?
Strategy is a race to one ideal position

• Strategy is the creation of a uniqueand
  valuable position, involving a differentset of
  activities(true sustainability arises when
  competitors do not want to imitatebecause of
  tradeoffs - i.e. Incompatibilities between
  positionsthat create the need for choice)
• Strategy is makingtradeoffs in competingand
  choosing what not to do

4
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
• Strategy must encompass both

5
Strategy

• What is a Strategy?
• Unique Position
• What do we do differently?
• Tailored Activities
• We focus on
• Activities fit together in an integrated system
• It all comes together
• Clear Tradeoffs
• What do we give that increases a customers
  switching costs?
• Continuity of position but consistent improvement

• What is not a Strategy?
• Best Practice Improvement
• A Vision
• Learning
• Agility
• Flexibility
• Innovation
• Restructuring
• Merger / Consolidation
• Alliances / Partnering
• IT / The Internet

6
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?

7
Target Customers

• ???
• Why them?

8
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

9
Competitive Advantage
Through Transfer of Skills

• Activities involved must be similar enough that
  sharing expertise is meaningful
• Thats 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

10
Differentiators - General

• What are they?