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Esta es una de las presentaciones de Michael Porter cuando estuvo en Lima
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1 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Professor Michael E. PorterHarvard Business School
Lima, Peru
November 30, 2009This presentation draws on ideas from Professor Porter’s books and articles, in particular, Competitive Strategy (The Free Press, 1980); Competitive Advantage (The Free Press, 1985); “What is Strategy?” (Harvard Business Review, Nov/Dec 1996); “Strategy and the Internet” (Harvard Business Review, March 2001) and On Competition (Harvard Business Review, 2008). No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Michael E. Porter. Additional information may be found at the website of the Institute for Strategy and Competitiveness, www.isc.hbs.edu. Version: Nov. 25, 2009
Strategic Thinking: Implications for Peruvian Companies
2 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Thinking Strategically
COMPETING TO BE THE BEST
COMPETING TO BE THE COMPETING TO BE THE BESTBEST
COMPETING TO BE UNIQUE
COMPETING TO BE COMPETING TO BE UNIQUEUNIQUE
• The worst error in strategy is to compete with rivals on the same dimensions
3 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Understanding the Concept of Strategy
• Strategy is more than a particular set of actions– “Our strategy is to merge…”– “… internationalize…”– “… consolidate the industry…”– “… outsource…”– “…double our R&D budget…”
• Strategy is different than aspirations– “Our strategy is to be #1 or #2…”– “Our strategy is to grow…”– “Our strategy is to be the world leader…”– “Our strategy is to provide superior returns to our shareholders…”
• Strategy is not the same as vision– “Our strategy is to best understand and satisfy our customers’ needs…”– “… provide superior products and services…”– “…to advance technology for mankind…”
• Strategy defines the company’s distinctive approach to competing and the competitive advantages on which it will be based
4 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Setting the Right Goals
• Strategic thinking starts with setting proper financial goals for the company
• The fundamental goal of a company is superior long-term return on investment
• Growth is good only if superiority in ROIC is achieved and sustained
– ROIC threshold
• Setting unrealistic profitability or growth targets can undermine strategy
5 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Shareholder Value Is Not The Goal
Superior Economic Performance
Superior Economic Superior Economic PerformancePerformance Shareholder ValueShareholder ValueShareholder Value
• Sustained ROIC and Growth
• Stock Price
• Shareholder value is the result of creating real economic value
• Pleasing today’s shareholders is not the goal
6 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
• The company’s overall mix of businesses and the integration of business unit strategies
Multiple Levels of Strategy Should Drive Competitive Advantage
Competitive or Business Strategy Competitive or Competitive or
Business StrategyBusiness Strategy
• How to compete in each distinct business or industry
Corporate or Portfolio StrategyCorporate or Portfolio StrategyCorporate or Portfolio Strategy
7 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Economic Foundations of Competition
IndustryStructureIndustryIndustryStructureStructure
Relative Position Within the
Industry
Relative Position Relative Position Within the Within the
IndustryIndustry
- Overall Rules of Competition - Sources of Competitive Advantage
• The basic unit of strategic analysis is the industry– Defining the relevant businesses and business units (product scope /
geographic scope) is essential to good strategy
• Economic performance results from two distinct causes
• Strategic thinking must encompass both
8 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Disaggregating Economic Performance: Industry vs. Position
0%
5%
10%
15%
20%
25%
30%
35%
Revlon Paccar
Return on Invested Capital
1993-2007
13.6%
31.6%
27.8%
Industry Average
10.5%
Note: Excess cash is calculated by subtracting cash in excess of 10% of annual revenue.Source: Compustat (2008), author’s analysis
ROIC = Earnings before interest and taxes
divided by invested capital less excess cash
9 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Fundamentals of Industry Structure
• Part of the strategy agenda is to drive improvements in industry structure
Threat of Substitute Products or Services
Threat of New Entrants
Rivalry Among Existing
Competitors
Bargaining Power of Suppliers
Bargaining Power of Buyers
10 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Reshaping Industry Competition
Zero Sum Competition Zero Sum Zero Sum
CompetitionCompetitionPositive Sum Competition
Positive Sum Positive Sum CompetitionCompetition
• Compete head to head
• One company’s gain requires another company’s loss
• Competition undermines industry profitability
• Compete on strategy
• More than one company can be successful
• Competition expands the value pool
11 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Positioning and Industry StructureHeavy Trucks
• Large independent suppliers of engines and drive train components
• Unionized labor
Bargaining Power of Suppliers
Bargaining Power Bargaining Power of Suppliersof Suppliers
Rivalry Among Existing
Competitors
Rivalry Among Existing
Competitors
Bargaining Power of Buyers
Bargaining Power of Buyers
Threat of New Entrants
Threat of New Threat of New EntrantsEntrants
Threat of Substitute Products or
Services
Threat of SubstituteThreat of Substitute Products or Products or
ServicesServices
• Many truck producers are assemblers
• Heavy price competition on standardized models
• Large fleets• Leasing companies• Small fleets and owner
operators
• Railroads• Water transportation
12 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Paccar Strategic Positioning
• Focus on owner-operators
• Design trucks with special features and amenities
• Customization and build-to-order
• Design for low truck operating costs
• Offer extensive roadside assistance to truckers
• Premium price
• Different customers / different basis of competing
13 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Strategic Positioning Economic Fundamentals
Differentiation(Higher Price)
Lower Cost
CompetitiveAdvantage
CompetitiveAdvantage
14 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
• Strategy is reflected in how activities in the value chain are configured and linked together
Foundations of Competitive Advantage Configuring the Value Chain
SupportActivities
Marketing& Sales
(e.g. Sales Force,
Promotion, Advertising,
Proposal Writing, Web
site)
InboundLogistics
(e.g. Incoming Material
Storage, Data Collection,
Service, Customer Access)
Operations
(e.g. Assembly, Component Fabrication,
Branch Operations)
OutboundLogistics
(e.g. Order Processing,
Warehousing, Report
Preparation)
After-Sales Service
(e.g. Installation, Customer Support,
Complaint Resolution,
Repair)
Ma
rg
in
Primary Activities
Firm Infrastructure(e.g. Financing, Planning, Investor Relations)
Procurement(e.g. Components, Machinery, Advertising, Services)
Technology Development(e.g. Product Design, Testing, Process Design, Material Research, Market Research)
Human Resource Management(e.g. Recruiting, Training, Compensation System)
Value
What buyers are willing to pay
• Competing in any business involves performing a set of discrete activities, in which competitive advantage resides
15 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
• Creating a unique competitive position
• Assimilating, attaining, and extending best practices
OperationalOperationalEffectivenessEffectiveness
StrategicStrategicPositioningPositioning
Achieving Superior Performance Operational Effectiveness is Not Strategy
Do the same thing better Do things differently to meet different needs
16 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Five Tests of an Excellent Strategy
• A unique value proposition
• A different, tailored value chain
• Clear tradeoffs, and choosing what not to do
• Activities in the value chain that fit together and reinforce each other
• Strategic continuity with continual improvement in realizing the strategy
• A unique value proposition
• A different, tailored value chain
• Clear tradeoffs, and choosing what not to do
• Activities in the value chain that fit together and reinforce each other
• Strategic continuity with continual improvement in realizing the strategy
17 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Defining the Value Proposition
What Relative Price?
What Relative What Relative Price?Price?
What Customers?
What What Customers?Customers?
Which Needs? Which Which
Needs?Needs?
• What end users?
• What channels?
• Which products?
• Which features?
• Which services?
• Unique value propositions often expand the market
• Premium? Discount?
18 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Strategic Positioning IKEA, Sweden
• Young, sophisticated or space constrained buyers who value style and materials but are price sensitive
• Stylish, space efficient and scalable furniture and accessories at very low price points
• Modular, ready-to-assemble, easy to package designs
• In-house design of all products• Wide range of styles displayed in huge
warehouse stores with large on-site inventories• Self-selection• Self-assembly by the customer• Extensive customer information in the form of
catalogs, explanatory ticketing, do-it-yourself videos, and assembly instructions
• Ikea designer names attached to related products to inform coordinated purchases
• Long hours of operation• Suburban locations with large parking lots• On-site, low-cost, restaurants• Child care provided in the store• Self-delivery by most customers
Distinctive Activities
Distinctive Distinctive ActivitiesActivitiesValue PropositionValue PropositionValue Proposition
19 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Strategic Positioning Nespresso
• Uniquely high quality, easy to prepare espresso coffee at a premium price
• Demanding, convenience- sensitive, affluent consumers, and offices
• Extra-high quality ground coffee in 16+ varieties
• Individually proportioned capsules for freshness and ease of use
• Tailored espresso machines manufactured by high-end machine vendors
• Capsules sold only online or through about 200 coffee boutique shops in major cities, not in mass market channels
• Nespresso Club to achieve high levels of communication with customers
• Focused image-oriented media advertising
Distinctive Activities
Distinctive Distinctive ActivitiesActivitiesValue PropositionValue PropositionValue Proposition
20 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Five Tests of an Excellent Strategy
• A unique value proposition
• A different, tailored value chain
• Clear tradeoffs, and choosing what not to do
• Activities in the value chain that fit together and reinforce each other
• Strategic continuity with continual improvement in realization
21 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Making Clear Strategic Tradeoffs
• Tradeoffs exist where strategic positions are incompatible
Strategic Tradeoffs
– Incompatible product or service features or attributes
– Differences in the value chain deliver a chosen value proposition
– Inconsistencies in image or reputation between strategic positions
– Limits in organizational capacity to implement multiple ways of competing simultaneously
• Tradeoffs make a strategy hard for competitors to imitate
• An essential part of strategy is choosing what not to do
22 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Product• Higher priced, fully assembled products
• Customization of fabrics, colors, finishes, and sizes
• Design driven by image, materials, varieties
Value Chain• Source some or all lines from outside
suppliers• Medium sized showrooms with limited
portion of available models on display• Limited inventories / order with lead time• Extensive sales assistance
• Traditional retail hours
Strategic Tradeoffs IKEA, Sweden
Product• Low-priced, modular, ready-to-assemble
designs • No custom options
• Furniture design driven by cost, manufacturing simplicity, and style
Value Chain• Centralized, in-house design of all products
• All styles on display in huge warehouse stores
• Large on-site inventories• Limited sales help, but extensive customer
information• Long hours of operation
IKEAIKEAIKEA Typical Furniture RetailerTypical Furniture RetailerTypical Furniture Retailer
23 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Typical Thinking on the Sources of Competitive Advantage
• “Key” Success Factors
• “Core” Competencies
• “Critical” Resources
• “Key” Success Factors
• “Core” Competencies
• “Critical” Resources
• Competitive advantage is seen as concentrated in a few parts of the value chain
• Successful strategies create numerous advantages, not a few
24 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Integrating the Value Chain Zara Apparel
Source: Draws on research by Jorge Lopez Ramon (IESE) at the Institute for Strategy and Competitiveness, HBS
Wide range of styles
Customers Customers chic but chic but
costcost-- consciousconscious
• Strategic fit comes from leveraging what is different to be more different
Tight coordination
with 20 wholly-owned
factories
JIT delivery
Little media advertising
WordWord--ofof-- mouth mouth
marketing marketing and repeat and repeat
buyingbuying
Global team of trend-
spotters
Advanced production machinery
CuttingCutting-- edge fashion edge fashion at moderate at moderate
price and price and qualityquality
Prime store Prime store locations in locations in high traffic high traffic
areasareas
Extensive use of
store sales data
Majority of production in Europe
Very Very flexible flexible
production production systemsystem
Very Very frequent frequent product product changeschanges
25 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Strategic Continuity
• Continuity of strategy is a precondition for sustainable competitive advantage– e.g., Understanding the strategy– Building truly unique skills and assets– Establishing a clear identity– Strengthening fit across the value system
• Reinvention and frequent shifts in direction are costly and confuse the customer, the industry, and the organization
• Strategic continuity requires an enduring value proposition while continuously improving ways to realize it– Strategic continuity and continuous change should occur simultaneously– Continuity of strategy allows learning and change to be faster and more
effective
26 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Growing Strategically
1. Make the strategy even more distinctive2. Deepen the strategic position with target customers (rather than
broaden it)3. Expand geographically to tap new regions or countries using
the same positioning4. Expand the market for what the company can uniquely deliver
• It is an illusion that growth in new, unserved segments is profitable
• It is dangerous to attempt to grow faster than the underlying market for an extended period.
• Industry leaders should concentrate as much, or more, on growing the industry as on growing market share
27 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Strategic Thinking at Peruvian Companies
• Low Price
• Share of Market
• Product / Product Features
• Export Uniform Products
• Superior Value
• Unique Position
• Customer Experience• Total Customer Support
• Locally-Tailored Regional and Global Strategy
28 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
• The company’s overall mix of businesses and the integration of business unit strategies
Multiple Levels of Strategy Should Drive Competitive Advantage
Competitive or Business Strategy Competitive or Competitive or
Business StrategyBusiness Strategy
• How to compete in each distinct business or industry
Corporate or Portfolio StrategyCorporate or Portfolio StrategyCorporate or Portfolio Strategy
29 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Premises of Corporate Diversification
• Overall corporate size per se is irrelevant for economic value
• Competition occurs at the business level
• Being part of a diversified company involves inevitable costs for business units
• Corporate strategy must produce a clear and offsetting benefit to the competitive advantage of business units which exceeds alternative governance structures (e.g. alliances)
• Shareholders can diversify directly at lower cost
• The central issue in corporate strategy is how the corporation adds competitive value to its businesses
30 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Emerging Country Business Groups
CarDealership
CarDealership
FinancialServices
FinancialServices
SugarSugarSugar
AirlineAirline
HotelHotelHotel
Real EstateServices
Real EstateReal EstateServicesServices
ComputerWholesalerComputerComputer
WholesalerWholesaler
GroceryStores
GroceryGroceryStoresStores
Fast FoodFranchisesFast FoodFast FoodFranchisesFranchises
IndustrialParts
IndustrialParts
Imports/ DistributionImports/ Imports/
DistributionDistributionFood
ProcessingFoodFood
ProcessingProcessing
TobaccoTobacco
TextilesTextilesTextiles
Miramax
HollywoodPictures
RadioStations
ResortHotels
RealEstate
Develop-ment
TelevisionProgram-
ming DisneyChannel
Motion Picture
Distribution
FamilyMotionPictures
AnimatedFeature Films
DirectMarketing
RetailStores
ConsumerProducts Disney
Records
SportsTeam Multi-
mediaProductions
Broadway Productions
Broadway Theater
HollywoodRecords
TelevisionNetwork
AdultCable
Channels
Traveling Shows
Televisi on
Stations
TimeSharing
Touchstone
YouthBooks andEducational
Materials
HyperionBooks
DiscoverMagazine
Mickey’sKitchen*
CruiseLine
ThemeParks
AdultPublishing / Newspapers
Diversified Companies in Advanced Economies
Walt Disney
Diversification in Emerging Economies
31 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Ma
rg
in
Ma
rg
in
Creating Corporate Value Added
• Successful companies capture interrelationships across the value chains of business units
– Transferring proprietary knowledge and skills across units– Sharing activities across business unit value chains
• Sharing corporate overhead is not enough
32 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Obstacles to Strategic Thinking
• Misunderstanding strategy principles
• Industry conventional wisdom leads all companies to follow common practices
• Customers ask for incompatible features or request new products or services that do not fit the strategy
• Inappropriate goals and performance metrics bias strategy choices
• A desire for consensus blurs strategic tradeoffs
• Short term pressure to please shareholders
33 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
• Drive operational improvement, but establish a clear strategy
• Communicate the strategy relentlessly to all constituencies
• Measure progress against the strategy using tailored metrics tied to the company’s position
• Maintain discipline around the strategy, in the face of many distractions.– Commitment to strategy is tested every day
• Tailor responses to market trend to the strategy
• Sell the strategy and how to evaluate progress against the strategy to the financial markets
The Role of Leaders in Strategy
34 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Corporate Social Responsibility A Growing Agenda
• External pressures for CSR continue to grow• Numerous outside parties are monitoring, ranking, and reporting
social performance• The legal, business and reputation risks are great for companies
engaging in practices deemed unacceptable
YET
• Few companies have integrated society into strategy in a way that reinforces competitive advantage for the business
AND
• Concern with social issues will be a defining characteristic of the post-crisis era
35 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
• There is an inevitable link between business and society• A healthy business depends on a healthy community to create
demand for its products and provide a supportive business environment
• A healthy society depends on competitive companies that can create jobs, support high wages, build wealth, buy local goods, and pay taxes
• There is a long-term synergy between economic and social objectives
Integrating Company and Community
Social Development
CompanyCompetitiveness
36 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Competitiveness and Social Issues
Company Productivity
Energy Use
Water Use
Employee Health
Gender Equity
Worker Safety
Worker Education and
SkillsPoverty in the Company’sCommunities
EnvironmentalImpact
37 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
The Concept of Shared Value
• Find and expand the points of convergence between economic and social objectives
– These points of convergence are growing
• Achieve shared value through understanding new needs, new technologies, and new approaches to management
• Shared value opportunities are even greater in developing countries
• Shared value thinking applies equally to NGOs and governments
Shared Value: Policies and practices that enhance the competitiveness of a company while simultaneously advancing economic and social conditions in the communities in which it operates
38 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Creating Shared Value Nestlé
Nutrition
Water Rural Development
39 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Creating Shared Value Nespresso
• Reconfigure the value chain– Reconceiving coffee procurement
• Upgrade the coffee cluster in each sourcing region
• Take concerted action: partnering with stakeholders
Shared Value
Farmers• Better prices• Better yields• Better processing
Community• Environmental
sustainability• Economic
development
Nespresso• Better quality• Stable supply• Reinforces
strategy
40 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Energy efficient vehicles
Ecoimagination
Enabling the market for investments in renewable energy and climate change
Strategy and Society Other Case Studies
• Toyota
• General Electric
• Swiss Re
41 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
The Moral Purpose of Business
• The most important thing a corporation can do for society is to contribute to a prosperous economy
– Business has no need to be defensive about its role
• However, corporations depend on a healthy society to sustain competitiveness
• Companies have the tools, capabilities, and resources to have a major impact on social issues
• Each company should identify the particular set of societal problems that it is best equipped to help resolve, and from which will arise the greatest long term synergy with its business
• Addressing these issues using the principles of shared value will lead to self-sustaining solutions
• Businesses are invaluable strategic partners for NGO’s, government and other institutions to achieve society’s most cherished aims
42 Copyright 2009 © Professor Michael E. Porter20091130 – Peru (Strategy).ppt
Strategy in Economic Downturns
• Create a positive agenda
• Refocus on strategy
• Return to economic fundamentals
• Downsize to a strategy, not across the board
• Do not overreact to distressed industry conditions
• Use the downturn to get things done that would be more difficult in normal times
• Position for long term economic performance, not near term stock price
• Seize opportunities for discontinuities which are more likely to emerge
• Strategy is more important in downturns, not less