Strategy: A History

by Lawrence Freedman

For Porter, strategy was all about positioning. The menu of strategies was small and the choice would depend on the nature of the competitive environment, with the aim of finding a position that could be defended against existing competitors and those trying to enter the market. Porter offered three generic strategies: staying market leader by keeping costs down, having a product that was sufficiently different that it could not be challenged by other competitors (differentiation), and identifying a particular part of the market where there were few challengers (market specialization). He argued that it was important to pick one of these strategies, stick to it, and never get “stuck in the middle,” because that would almost “guarantee low profitability.” Since the best position would be extremely profitable, there would then be sufficient resources to improve the position. The key thing was to find and exploit the imperfections in the market. In terms of the SWOT framework, this was about addressing opportunities and threats rather than strengths and weaknesses. There was very little interest in internal organization and the actual implementation of a strategy.