The concept of strategy is complex and multi-faceted and it has been defined in many different ways.

Michael porter emphasizes on the distinction between operational effectiveness and strategy as one of
the core problem that many corporations are failing at to achieve the efficiencied in the business world.
Operational effectiveness as per Micahel potter is necessary but not sufficient, to which he further adds
that a company can outperform its rivals if it can establish a difference that it can preserve. It must
deliver a greater value to its costumer or create comparable value at a lower cost or do both.
Operational effectiveness cannot be however limited to efficenecy and it also covers other various
activity that allows a company to better utilize its inputs. Potter explains why operational effectiveness
is not sufficient enough to gain superior profitability. He argues that even though few companies have
competed successfully on the basis of operational effectiveness but staying ahead of rivals gets harder
everyday. The most obvious reason for that is the rapid diffusion of best practices and the most generic
solution to it is to diffuse fastest.

Another reason he adds why OE is not sufficient is competitive convergence which seems more subtle
and insidious.

The example of Japanese companies given by potter explains how Japanese companies have failed to
learn about strategy by just leaning on the concept of operational effectiveness. The increasing narrow
gap in the operational effectiveness now has caught Japan in a trap of their own making and if they want
to escape this gap they must learn about strategy.

Strategy Rests on unique activities

Potter further explains competitive strategy is about being different which means deliberately choosing
a different set of activities to deliver a unique mix of value. The example of southwest airlines company
portrays how it has adopted various set of activities to attract the costumers and ultimately gaining the
competitive advantage and profitability. He also adds that the true essence of strategy is in the
activities-choosing to perform activities differently than its rivals. Another example of IKEA, a swedish
company which is a global furniture retailer which shows how it has adopted a clear strategic positioning
in achieving the competitive advantage against its rivals.

Potter has explained about the origin of strategic positioning which emerges from three distinct
sources. First variety based positioning which emphasizes on the choice of products rather than
customer segments. Second is need based positioning which comes closer to traditional thinking about
targeting a segment of costumers. Third basis for strategic positioning is segmenting costumers who are
accessible in different ways which is also called access based positioning.

A sustainable strategic position requires trade offs

Strategic positioning can always not be enough to gurantee a sustainable advantage and strategic
positioning is not sustainable unless there are trade offs with other positions. Trade offs occur when
activities are incompatible. Trade off create the need for choices and protect against responsibilities and
straddlers. The example of Neutrogena displays how it has been successful in attracting the costumer to
desire its product through its trade off which protected the company from imitators. He further adds
trade off are essential to strategy since they create the need for choice and purposefully limit what a
company offers.
Fit drives both competitive advantage and sustainability

In this regard potter explains how southwest has been able to achieve the competitive advantage in the
airlines services. Southwest strategy involves a whole system of activities, not collection of parts. Its
competitive advantage comes form the way it activities fit and reinforcs one another. Fit locks out the
imitators by creating a chain that is as strong as its strongest link. Southwest activities complement one
another in a way that create real economic value. One’s activity cost, for example, is lowered because of
the way other activities are performed. Similarly, one activity’s value to costumers can be enhanced by a
company’s other activities. That is the way strategic fit creates competitive advantage and superior
profitability.