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Michael Porter believes that firms achieve competitive advantage by creating a value chain. His ideas and beliefs are great for strategist needs in order to diagnose and enhance competitive advantage, the value chain. The value chain analysis allows the manager to separate the principal activities a firm performs in designing, producing, marketing, and distributing its product or service. Porters value chain framework is a model that helps to analyze specific activities through which firms can create value by performing activities and competitive advantage. The primary activities include: inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities firm infrastructure, human resources management, technology development, and procurement. It is these activities from which competitive advantage ultimately stems. By showing how all the firms activities can be examined in the integrated way, Porter provides a new and practical perspective on competitive strategy. Using value chain analysis, Porter shows: How to create competitive advantage through corporate strategy by harnessing interrelationships among related industries; How to defend a firms competitive position when challenged and how and when to attack an industry leader. Just to name a couple.
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The essence of strategy is choice and trade-offs and fit. What makes Southwest Airlines so successful is not a bunch of separate things, but rather the strategy that ties everything together. If you were to experiment with onboard service, then with gate service, then with ticketing mechanisms, all separately, youd never get to Southwests strategy. Competition is subtle, and managers are prone to simplify. What we learn from looking at actual competition is that winning companies are anything but simple. Strategy is complex. Great leaders are able to enforce the trade-offs: “Yes,