Competitive Strategy: Techniques for Analyzing Industries and Competitors,

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              Faculty of Business Assignment Title Sheet

Michael Porter of Harvard Business School is perhaps the best known of all the strategy theorists. He has generally been more prolific than the rest. Porter has been responsible for the writing of numerous books and articles that have been widely accepted in the field. He has been especially involved in the creation or popularization of a number of tools that have been widely used in the discipline.

Porter’s first book for practicing managers, Competitive Strategy: Techniques for Analyzing Industries and Competitors, was first published in 1980. Drawing heavily on industrial economics (a field of study that tries to explain industrial performance through economics), he was trying ‘to take these basic notions and create a much richer, more complex theory, much closer to the reality of competition’. The book defines five competitive forces that determine industry profitability – potential entrants, buyers (customers), suppliers, substitutes, and competitors within the industry. Each of these can exert power to drive margins down. The attractiveness of an industry depends on how strong each of these influences is. Competitive Strategybrought together in a rational and readily understandable manner both existing and new concepts to form a coherent framework for analyzing the competitive environment.

The realization that he had not been focusing on choice of competitive positioning, this work led Porter in turn to his interests in the concept of competitive advantage, the theme of his next major book, Competitive Advantage: Creating and Sustaining Superior Performance (1985). He sought a middle ground between the two polarized approaches then accepted-on the one hand, that competitive advantage was achieved by organizations adapting to their particular circumstances; and, on the other, that competitive advantage was based on the simple principle that the more in-tune and aware of a market a company is, the more competitive it can be (through lower prices and increased market share). From analysis of a number of companies, he developed “generic strategies”: Porter contends that there are three ways by which companies can gain competitive advantage:

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