The document discusses the differences between strategy and operational effectiveness. It argues that strategy involves performing unique activities differently than rivals by making trade-offs to achieve a sustainable strategic position based on variety, customer needs, or access. The document then analyzes the strategies of three Indian domestic airlines, finding that IndiGo has been most successful by adopting a low-cost positioning and ensuring fit between its activities, while Kingfisher and Jet Airways lacked clear positioning and fit between their activities.

1. WHAT IS
STRATEGY?
-- MICHAELE. PORTER
SUMMARY, APPLICATION, AND LIMITATIONS

2. SUMMARY
• Managers fail to distinguish Operational Effectiveness
(OE) and Strategy.
• Strategy being replaced by OE and is not sustainably
profitable.
• Managers to Identify and reject reject false trade-offs.
• Perform unique activities differently from rivals.
• Strategic Positions (Variety/Needs/Access based).
• A Sustainable Strategic Position Requires Trade-offs.
August 3, 2013
Indian Institute of Management Raipur
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3. SUMMARY CONTINUED
• Trade off incompatible activities for sustainable advantage
• Essence of strategy: choosing what not to do.
• Fit Drives Both Competitive Advantage and Sustainability
• Types of Fit/Sustainability
• Rediscovering Strategy
• The Failure to Choose
• The Growth Trap
• Profitable Growth
• The Role of Leadership
August 3, 2013
Indian Institute of Management Raipur
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4. INDIAN DOMESTIC AVIATION SECTOR
AIRLINES INDIGO KINGFISHER JET AIRWAYS
FACTORS
Airport Charges Same Same Same
Fuel Cost Same Same Same
Regulatory Environment Same Same Same
Profit/Loss (In Rupees) 650 Crores -2328 Crores -1236 Crores
August 3, 2013
Indian Institute of Management Raipur
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5. STRATEGY IMPLEMENTATION
INDIGO
 Need based positioning: Low Cost and “On time is a wonderful
thing.”
 Trade-off - Premium Segment vs Growing Middle Class.
 Simple consistency; low cost
KINGFISHER & JET AIRWAYS
 Diffused positioning.
 Trade-off - Not very clear.
 No fit between activities.
August 3, 2013
Indian Institute of Management Raipur
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6. DIFFERENTIALACTIVITIES
INDIGO
 Similar aircraft in fleet (A320 Air bus); younger fleet(2.3 years old)
 Connecting metros with 2-tier cities (33 destinations/day), better
synchronization and fit.
 Multi-source revenue (Ads, Food, and Onboard Merchandising)
 Best in market OTP (93%), Load Factor (83.9%), and Cancel Rate.
KINGFISHER & JET AIRWAYS
 Diverse aircrafts in fleets; No fit between strategies and activities.
 Connecting metros to metros and metros with 2-tier cities, less
synchronized and low fit.
August 3, 2013
Indian Institute of Management Raipur
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7. LIMITATION(S)
 Time is a big constraint: Long-term strategies may span to over 10-15 years.
During this time, the business environment may not turn out to be different
from what was predicted. This will create hazards for the company.
 Successful strategies are imitated by other companies. Hence, no business
will survive on just one business and need to strive towards better strategies.
 Dynamic business environment may call for urgent managerial decisions.
Adopted strategy may constrain the management to take conflicting
decisions.
 High degree of government regulation can render long term strategies
useless. (like insurance, financial, telecom, and aviation sectors)
 Operational Effectiveness itself can be a strategy where the technology is
slow moving.
August 3, 2013
Indian Institute of Management Raipur
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8. THANK YOU.
August 3, 2013
Indian Institute of Management Raipur
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