Competitive Strategy by Michael Porter – Book Introduction


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Heidi Macomber reads Competitive Strategy by Michael Porter – the Book Introduction and summaries of Parts 1, 2 and 3.

Today I am focusing on reviewing business competitive strategy and what better way to do so than to read some Michael Porter? In Competitive Strategy, Techniques for Analyzing Industries and Competitors, the introduction is very nicely done as it provides the perfect summary of some of Porters most important and better known tools. This podcast/post includes a reading of the introduction as well as the summaries for each of the three book parts.

  • Part I – General Analytical Techniques
    • THE STRUCTURAL ANALYSIS OF INDUSTRIES
    • GENERIC COMPETITIVE STRATEGIES
    • A FRAMEWORK FOR COMPETITOR ANALYSIS
    • MARKET SIGNALS
    • COMPETITIVE MOVES
    • STRATEGY TOWARD BUYERS AND SUPPLIERS
    • STRUCTURAL ANALYSIS WITHIN INDUSTRIES
    • INDUSTRY EVOLUTION
  • Part II – Generic Industry Environments
    • COMPETITIVE STRATEGY IN FRAGMENTED INDUSTRIES
    • COMPETITIVE STRATEGY IN EMERGING INDUSTRIES
    • THE TRANSITION TO INDUSTRY MATURITY
    • COMPETITIVE STRATEGY IN DECLINING INDUSTRIES
    • COMPETITION IN GLOBAL INDUSTRIES
  • Part III – Strategic Decisions
    • THE STRATEGIC ANALYSIS OF VERTICAL INTEGRATION
    • CAPACITY EXPANSION
    • ENTRY INTO NEW BUSINESSES

Notes for this section on competitive strategy are Porters 5 Forces Driving Industry Competition:

Porters 5 Forces Driving Industry Competition, image from page 4, Figure 1-1, of Competitive Strategy, Techniques for Analyzing Industries and Competitors.
  1. Threat of new entrants
  2. Bargaining power of buyers
  3. Bargaining power of suppliers
  4. Threat of substitute products or services
  5. Rivalry among Existing Firms
Competitive Strategy: Techniques for Analyzing Industries and Competitors

Porter discusses the Wheel of Competitive Strategy in Part 1 which helps you organize the firms key aspects of its own competitive strategy on a single page.

Competitive Strategy, Figure I-1, page xvii, The Wheel of Competitive Strategy
Competitive Strategy, Figure I-1, page xvii, The Wheel of Competitive Strategy

In the hub of the wheel are the firm’s goals, which are its broad definition of how it wants to compete and its specific economic and noneconomic objectives. The spokes of the wheel are the key operating policies with which the firm is seeking to achieve these goals.

Page xvii, Competitive Strategy
Figure I-2, Competitive Strategy, Porter, Context in Which Competitive Strategy is Formulated
Competitive Strategy, Figure I-1, page xvii, The Wheel of Competitive Strategy, page xviii

Let’s talk about how we compete. Porter says there are four key factors that determine the limits of what we can accomplish in our competitive strategy. When I read his explanation, it sounded very much like SWOT analysis as he discusses strengths and weaknesses combined with values that determine internal limits to competitive strategy. In addition, there are industry opportunities and threats having to do with the competitive environment (risks and potential rewards) as seen through societal expectations that have an impact on the company.

  1. Industry Opportunities and Threats (Economic and Technical) – External Factors
  2. Broader Societal Expectations – External Factors
  3. Company Strengths and Weaknesses – Internal Factors
  4. Personal Values of the Key Implementers – Internal Factors

Tests of Consistency

  1. Internal Consistency
  2. Environment Fit
  3. Resource Fit
  4. Communication and Implementation

Process for Formulating a Competitive Strategy

A. What is the Business Doing Now?

B. What is Happening in the Environment

C. What Should the Business be Doing?

Resources

Porter, M.E. (1980). Competitive Strategy, Techniques for Analyzing Industries and Competitors. New York, NY: The Free Press, A Division of Macmillan Publishing Co., Inc.

**use this link below to see competing prices on used offerings of this book**

Competitive Strategy: Techniques for Analyzing Industries and Competitors

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