While many business leaders still believe that competition is about reaching the best position, Professor Michael E. Porter, the “father” of competitive strategy, asserts that competition is about building uniqueness for your products and brands. On December 1, Professor Michael E. Porter came to Vietnam for the first time to chair the seminar “Global Competition and Vietnam’s Advantages”. The person who chaired the “Annual Ranking of Competitiveness” of more than 120 countries in the world is currently considered a master strategist of the era. According to him, the biggest mistake in strategy is competing with competitors on the same type of product with the same business method.
Competitive positioning is defined by him as doing things differently to achieve a different goal.
A company’s competitive strategy is therefore most clearly expressed in its value proposition (offered to customers) and the specific implementations to achieve those values. This value proposition always answers three questions: Which customers? What needs? What price? A novel and unique value proposition will often help expand market share.
He cited the case of Swedish furniture manufacturer IKEA as an example. IKEA offers a typical value group of serving young, first-time buyers, who are price-sensitive, and who like stylish, space-saving items at a relatively affordable price. From there, the company implements specifics such as: products with easy-to-pack, easy-to-assemble designs, designing all products according to customer requirements, extended service hours, sales points in the suburbs, having restaurants serving at low prices, having in-store childcare, etc. Professor Porter asserts that IKEA is certainly not the best furniture manufacturer, but it obviously has a clear competitive strategy with its own product line and operating methods.
He emphasized that strategy is first and foremost a choice of what to do, who to serve, how to serve, and moreover, a choice of what not to do to avoid following the paths others have taken. The professor explained that with limited resources, of course you cannot satisfy everyone, and if you do not know how to narrow the scope, you will certainly fail. Moreover, he argued, you can “copy” hundreds of things from a successful business but never implement their entire business strategy, which is why you cannot be as successful as them.
In addition, strategy must be considered a long-term pursuit so that customers have time to "realize" who you are and what value you are providing them. Hasty, continuous changes are not only costly and useless, but also have the opposite effect in affirming the brand. So does strategy force businesses to stand still? On the contrary, Professor Porter asserts that improvements in specific activities are continuous work.
Responding to the question of what businesses should do in the current recession, the professor said that more than ever, this is the time for businesses to focus more on strategy. Instead of “scratching your head” in the face of unfavorable conditions such as falling demand or difficult credit, take advantage of this period of stagnation to review, reorient, start from the most basic points and determine the position for a long-term race ahead, things that he said are difficult to do under normal conditions when businesses have to race to meet market demand.
According to TBKTSG
