Competitive Strategy: Techniques for Analyzing Industries and Competitors

 
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Now nearing its 60th printing in English and translated into nineteen languages, Michael E. Porter's Competitive Strategy has transformed the theory, practice, and teaching of business strategy throughout the world. Electrifying in its simplicity -- like all great breakthroughs -- Porter's analysis of industries captures the complexity of industry competition in five underlying forces. Porter introduces one of the most powerful competitive tools yet developed: his three generic strategies -- lowest cost, differentiation, and focus -- which bring structure to the task of strategic positioning. He shows how competitive advantage can be defined in terms of relative cost and relative prices, thus linking it directly to profitability, and presents a whole new perspective on how profit is created and divided. In the almost two decades since publication, Porter's framework for predicting competitor behavior has transformed the way in which companies look at their rivals and has given rise to the new discipline of competitor assessment.

More than a million managers in both large and small companies, investment analysts, consultants, students, and scholars throughout the world have internalized Porter's ideas and applied them to assess industries, understand competitors,, and choose competitive positions. The ideas in the book address the underlying fundamentals of competition in a way that is independent of the specifics of the ways companies go about competing.

Competitive Strategy has filled a void in management thinking. It provides an enduring foundation and grounding point on which all subsequent work can be built. By bringing a disciplined structure to the question of how firms achieve superior profitability, Porter's rich frameworks and deep insights comprise a sophisticated view of competition unsurpassed in the last quarter-century.

Customer Reviews:

  • Deserves six stars, but this was not a choice.
    It is known that Bill Gates (of Microsoft) is a fan of Michael Porter's work. This book perhaps best and succinctly captures Porter's simple yet brilliant methods of analyzing competitors in business. Those who would detract from his work should try to refute it, which would be in vain....more info
  • Overall Great Book / Very Simple Concepts
    The value of this book is not for its groundbreaking concepts (as no individual concept is overly insightful) as many reviewers have implied, but rather for the framework it provides. Almost all of Porter's main points are patently obvious to a modestly educated reader (e.g., a firm can compete on either charging a lower price or if it doesn't charge a lower price, it must make a differentiated/better product). Most points made in this book do not go much deeper than that, and any given reader would intuitively know any isolated strategy that Porter lays out without reading his book. However, the book is great not in that it will change your thoughts/intuitions, but in that it will give you a well-structured overall framework for analyzing competitive strategy holistically. In other words, it combines fairly obvious conclusions/intuitions into one overarching strategic overview.

    Most readers have noted the value that business managers can obtain by studying the text, but I can also see a lot of value that investors analyzing industries, or an individual company's position in an industry can get out of the book....more info
  • Timeless classic
    'Competitive Strategy' (along with Porter's 'Competitive Advantage' & 'Competitive Advantage of Nations') have remained as the 'classic' work on business strategy. Although the businesss world has evolved significantly, I find the framework & analysis of the book to still be greatly applicable & comprehensive....more info
  • Competitive strategy
    This is a great tool for people in the industry, graduate students, anyone wanting to climb the corporate ladder. Read it times over and you'll find interesting points, applicable to personal career as well as corporate strategy. Straight forwward analytical set of tools....more info
  • You Know It's a Classic -- So Just Buy It
    There's no point in me telling you something you already know (this seminal book came out over 25 years ago -- its REQUIRED reading at every respectable MBA program I can think of).

    What I will say is that this is a critical book to own if you want to understand how and why firms choose to penetrate (or avoid) markets. Speaking from my own experience, this is also a MUST HAVE if you want to understand industry dynamics if you are a consultant, or in my case, an aspiring equity research analyst....more info
  • An excellent book
    Much has been written about Porter in these reviews and elsewhere, so I won't repeat that information. Instead, I will focus on what drew me to this book, and from that, what its strengths and weeknesses are.

    I heard about "Competitive Strategy" because it was referenced by a number of stock analysts seeking to determine or project earnings of a particular company going forward. Read with that position alone in mind, "Competitive Strategy" is fairly esoteric. The book itself is written more from the perspective of a consultant or "big picture" thinker than it is from, say, the view of a financer or investor. While that was somewhat of a drawback for me for my purposes, it certainly does not detract from the overall value of the book.

    The book itself is quite readable, despite the academic credentials of the author and much of its audience and its theoretical bent. However, readers seeking quantafiable information will not find formulas or other information of a comparable nature to guide them. This is not unexpected, yet Porter's book is cited or referenced by a fair number of stock market analysts seeking support a variety of conclusions they've reached. After reading the book myself, I am forced to conclude that (i) there is no crystal ball for anyone to determine the future, and (ii) while Porter's book is an invaluable tool for management of a particular entity to use in assessing its competitive environment and strategy, it does not provide the individual investor with the ability to read futur events.

    In all, Porter's book is a great read, and should add greatly to any person's ability to analyze the environment in which a particular corporation exists. However, investors might wish to supplement it with methods from other disciplines (such as Benjamin Graham, Mary Buffett, Marty Whitman, etc.)....more info
  • Good but take some of it with a pinch of salt.
    This is probably the most comprehensive book on the subject. However, there are a few areas where it's recommendations may not be entirely correct. For example, suppliers have been taken as one of the five competitive forces. After the success of several companies in becoming more competitive by building closer relations with their suppliers (e.g. in implementing JIT), is this still valid? For example, must companies increase the number of suppliers to reduce their power (when so many other companies have been able to reduce their costs by giving one supplier Economies of Scale)? Also, given that 'Quality is Free' (at least up to a point), are the strategies of 'Differentiation' and 'Cost Leadership' really mutually exclusive? Readers are advised to take some of the recommendations with a pinch of salt....more info
  • Excellent reference for strategic analysis.
    Competitive Strategy by Michael Porter is an excellent source for providing critical analysis for strategic planning. This book outlines Porter's Five Forces Model in a fabulous, easy to comprehend writing style. However, the one flaw to this book is that it is a little weak in the area of emerging technology. It tended to be a little more vague with its detail then the rest of the book. Overall, it is still an excellent book and I would recommend it to everyone in the business community. (Especially MBA students)...more info
  • general analytical techniques
    competitive strateg...more info
  • Useful
    Useful, but not exactly intellectually demanding. Is this all there is to the theory of business strategy?

    And how did someone with such lousy (in fact downright ungrammatical) prose land a chair at Harvard?...more info

  • From Strategy to Marketing
    Even though Porter is supposed to be a strategy intellectual, I truly believe that he is truly a marvelous marketing guru. If not, how to explain that we buy several of his books with the same collection of lousy, repeated, common sense ideas?...more info
  • Landmark Book on How to Think about Competing
    "Competitive Strategy" was one of my favorite books when I was studying for an MBA. It continues to be one of my key reference books. It will help you learn how to think about competing. Although the concepts contained are now viewed as common sense, so many people ignore these basics and fail. This is a must read for anyone in business....more info
  • Taking Strategy by the Real Meaning
    It is nice when you see a book that takes the word "strategy" seriously these days.

    Although written a while ago, the reader finds it talking about what we see today. Understood and applicable by both layman as well as specialists without over-simplification of the framework-based books we find today and without the complexity of others of larger than life strategists.

    Although written a while ago, we still see it being referenced everywhere, and deservedly so.

    It is a nice read.
    ...more info
  • The single most important book on business strategy
    Michael E. Porter is a professor at Harvard Business School and a leading authority on Strategy and Competitiveness. He did his MBA and Ph.D from Harvard. He has served as an advisor to several business and government organizations. He was also a founder of the strategy and management consulting firm, Monitor Group.
    Professor Porter is best known for his landmark books that defined the field of Strategy - Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980) and Competitive Advantage: Creating and Sustaining Superior Performance (1985). These books are must reads at the leading business schools.
    I read Competitive Strategy (1980) for a Strategy course. It starts with a bang. On the very second page of the first chapter you will find the figure for the famous Five Forces Driving Industry Competition. While Porter did not intend this framework to be used for case interviews, in reality, this is a very important framework to know for the case interviews conducted by leading strategy and management consultancy firms. All top MBAs and anybody who has ever been hired by the best strategy and management consultancy firms knows this framework, and has probably read this book. The first chapter immediately proceeds to explaining each of the five forces:
    1. Threat of new entrants
    2. Intensity of rivalry among existing competitors
    3. Pressure from substitute products
    4. Bargaining power of buyers
    5. Bargaining power of suppliers
    While the first chapter alone is worth the cost of this book, I recommend it for the wisdom contained in the rest of the book. The chapters are organized under three parts (General Analytical Techniques, Generic Industry Environments, and Strategic Decisions). There are several thought provoking discussions on concepts such as A Framework for Competitor Analysis (Future goals, Assumptions, Current strategy, Capabilities), Market Signals and a Strategic Analysis of Vertical Integration.
    This book is the single most important book on business strategy. It is a classic - like the management classics of Peter Drucker. As with every classic, the examples are old (not to be confused with outdated). But, the competition HP faced for electronic calculators in the 70s, it still faces for computers today. There have been several changes in the players, technology, industries, globalization, etc, but the foundation built by Porter's masterpieces are still relevant today.
    Porter's second book Competitive Advantage (1985) introduced another important tool - The Value Chain. This analyzes primary activities (Inbound logistics, Operations, Outbound logistics, Marketing and Sales, Services) and support activities (Procurement, Technology development, Human resource management, Firm infrastructure) that firms must analyze to create value and competitive advantage.
    If my review was helpful to you, I request you to select "Yes" so that the rating is improved and more readers will get to read it. ...more info
  • Strategy - It's a matter of life and death
    As an active Business Consultant I'm often appalled at the lack of regard for the importance of strategy. It's a matter of life and death (at least for your company).

    "Vision without action is a daydream. Action without vision is a nightmare." - Japanese proverb


    Why read a book on strategy? Quite simply, to be successful. Technology and globalization culminated in ferocious competition for virtually all industries. Since industry forces, like ocean tides, loom large over the success on any individual business, it is wise to carefully study business strategy.

    Competitive Strategy is part one of Michael Porter's trilogy, providing a foundation for Competitive Advantage: Creating and Sustaining Superior Performance, and The Competitive Advantage of Nations.

    Two main themes are Porter's analysis of industries, which captures the complexity of industry competition in five underlying forces and his three generic strategies -- lowest cost, differentiation, and focus. In this book, Porter presents a whole new perspective on how profit is created and divided.

    As technology fads and Internet business models come and go, every company must still address the basics of competition as outlined within this book.

    The book consists of three parts - General Analytical Techniques, Generic Industry Environments, and Strategic Decisions. In addition, the two appendices - Portfolio Techniques in Competitor Analysis, and How to Conduct an Industry Analysis - should also be mentioned, as they are very useful.

    Part I, Porter discusses the structural analysis of industries (with the world-famous five forces), the three generic competitive strategies (overall cost leadership, focus, and differentiation). Also he discusses an excellent framework for competitor analysis, competitive moves, strategy toward buyers and suppliers, structural analysis within industries (strategic groups, strategic mapping, mobility barriers), and industry evolution (life cycle, evolutionary processes).

    In Part II, Porter discusses competitive strategy within various generic industry environments, such as fragmented industries (with no real market leader), emerging industries (e-commerce and Internet are excellent examples, although not mentioned in this book as it was written in 1980), mature industries, declining industries, and global industries.

    In Part III, Porter discusses strategic decisions which businesses/firms can take, such as vertical integration (forward, backward, partnerships), capacity expansion, and entry into new industries/businesses.

    In summary, it is your responsibility, as a business owner or senior manager, to lead your company into the future by identifying and seizing possibilities. Competitive Strategy helps you understand the competitive forces within an industry and the strategic steps a company can take to enhance its competitive position.

    ----

    Michael Davis, President - Brencom Strategic Business Consulting...more info
  • Act One of Three in a Symphony
    In act one Dr. Porter's sets up his model and makes it internally consistent. It allows for analysis of industries, just like the second act allows for this analysis to demonstrate which entitities within an industry have achieve competitive advantage. It is a great book but it must be read as a trio or you miss the point....more info
  • Starting point for business strategy
    Michael Porter is a Harvard Business School professor and a leading authority on competition and strategy. This book is a landmark in the field of strategy/strategic management, which later has become known as the positioning school. The book provides a great framework.

    The book consists of three parts - General Analytical Techniques, Generic Industry Environments, and Strategic Decisions. In addition, the two appendices - Portfolio Techniques in Competitor Analysis, and How to Conduct an Industry Analysis - should also be mentioned as they are very useful.

    In Part I, Porter discussess the structural analysis of industries (with the world-famous five forces), the three generic competitive strategies (overall cost leadership, focus, and differentiation), an excellent framework for competitor analysis, competitive moves, strategy toward buyers and suppliers, structural analysis within industries (strategic groups, strategic mapping, mobility barriers), and industry evolution (life cycle, evolutionary processes).

    In Part II, Porter discusses competitive strategy within various generic industry environments, such as fragmented industries (with no real market leader), emerging industries (e-commerce and Internet are excellent examples, although not mentioned in this book as it was written in 1980), mature industries, declining industries, and global industries.

    In Part III, Porter discusses strategic decisions which businesses/firms can take, such as vertical integration (forward, backward, partnerships), capacity expansion, and entry into new industries/businesses.

    Even after 20 years, most of this book still stands strong, although some people will argue this. Michael Porter has responded to his critics in the 1996-Harvard Business Review article 'What is Strategy?' which is available as e-book (pdf-file) at Amazon.com. It is still a MUST for MBA-students and all other people interested in strategy/strategic management. The book is simple to read with plenty of examples and thus does not become a struggle....more info
  • An unpleasent surprise
    I've heard about this book and Michael Porter for a long time; the people I have talked to absolutelly adore him and his writings, but I must say I was througly and repeatedly disappointed in this book. The strategy itself is - without a doubt - a brilliant approach to strategic management but as a piece of writing all I can say is: Dull, dull and dull!...more info
  • A Timeless Business Strategy Classic
    As one of my University of Minnesota-Carlson School of Management professors once stated, "Every marketer must read at least one of Michael Porter's books." Once school was out that summer, I took my professor's advice, I read "Competitive Strategy" and continuously find myself referring back to it over and over again. It is a truly timeless wonder on competitive strategy. I recommend it as a must read by every b-school student, business owner, c-level executive, and marketing professional....more info
  • A Classic
    Without a doubt, this book is a "must-have" for anyone involved in Strategic Planning or Analysis. Porter's work has aged nicely, many of his concepts can easily be applied to the current economic environment. It is not surprising that this book, along with his other work's is often quoted.
    Porter allows us to view industries and companies through an insightful lens. The framework Porter lays out is a great starting point for any analysis of industries or compeitors....more info
  • Amazing framework and techniques for analyzing competitors
    I have only read a couple of different chapters of this book, but have also read the book competitive advantage by the same author, and recently took a seminar with the author at Harvard. Porter has developed an excellent set of tools for analyzing a competitor in detail. Chapter 3 in particular presents a systematic way companies over the long term can look at and analyze their competitors. He also presents strategic ways for approaching markets when you are for instance attacking a leader or trying to maintain leadership and fend off challengers, and explains it in a lucid, systematic way. The author is one of the seminal people in the 2nd half of the 20th century associated with business strategy...more info
  • Michael E. Porter : The Master of Positioning School
    I met Mr. Porter when I began to study strategic planning because each time I read a book I saw the label of Porter. Mr. Porter is a strong apostle of Positioning school, namely he believes that a firm must position itself in an industry by analyzing the structure of it. Today, Mr. Porter and his school is under fire and an intensive attack (You can look at books of Mintzberg and Stacey ! ). But I strongly beleive that Mr. Porter is a "Logic Man", not an "idealist". He loves material realities. Although today very popular strategic management perspectives are in fashion, the perspective of the Positioning School are here to stay. Please do not think one-sidedly about Competitive Strategy by only reading the opposites of it, instead read the original source. This book is still a very strong classic. Highly reccommended....more info
  • Required reading for the strategist
    When I started as a strategy consultant, Porter's Competitive Strategy and the classic five forces model within provided me with a first look at the process and mindset of the pure strategist. A weekend spent reading this book gave me the framework to intelligently analyze company strategy. I've made it required reading for all new employees.

    If you are a business student (undergrad or MBA) and for some reason you have not read this, read it and assume everyone you interview with has read it. Use its basic principles in a case study interview and you'll pass with flying colors. Anyone in business of any sort should read this book and try applying it to your own business environment. Its pretty amazing how clear your business issues will appear.

    Now for the negatives. It is very out of date, so do not use any of his observations on any of the industries mentioned. His case studies towards the end of the book are so irrelevant they are not worth reading, just skimming. Read his justifications carefully, since you may find yourself disagreeing with a significant percentage.

    Despite its age, this is still the primer on strategy. Read this, and then read everything else....more info

  • Still going strong and worth the read...
    This is Porter's classic work on business strategy, and the bible of the positioning school of strategy. Sure, the field of strategy has progressed significantly over the past two decades, but is "Competitive Strategy" therefore obsolete? Absolutely not! The models are still valid and highly relevant -- they just need to be augmented with additional new economy strategic concepts. To master a subject one must understand it in many different ways, and so every serious strategist must thoroughly digest this work....more info
  • How Important Are Competitors in Setting Future Strategy?
    Anyone would agree that this book is the best overview of competitive strategy analysis ever written. The strength of the book is a solid outline of subjects and questions to improve your thinking, and get to be a step ahead of the competition. In highly-competitive, commodity businesses, that's usually what strategies focus on.

    On the other hand, the rapid advances of knowledge and technology mean that the relevant benchmark is perfection, not the competitor, in defining an ideal best practice. In that world, this book has serious limitations, because the competitive dimension is often less important than the customer and user dimension these days.

    Any business arena begins, as Peter Drucker so aptly put it, with the task "to create a customer." That reminder is especially relevant today when they are so many new ways to serve a customer's needs that no one has ever considered before. The strategic point of 'Blown to Bits' for example is that almost every business will see its vertical value chain (moving from resources through to the customer) broken apart into tiny segments each served by specialists. If you did not begin with that perspective in analyzing the impact of electronically-based business practices, you could easily focus on the wrong tasks using this book to create an over-broad strategy focus, rather than concentrating on just a few areas.

    I suspect that the applications of Moore's Law and Metcalfe's Law need to be explicitly considered as part of the analysis that Professor Porter is recommending.

    A more general weakness in this book is that it assumes that future conditions will be stable enough to draw conclusions about which conditions will be favorable, without giving enough guidance on how to deal with the increasing frequencies and degrees of volatility that we see (in areas like financial markets, commodity prices, the weather, changing customer preferences, and so forth).

    Although no book that takes such a narrow focus can help but have weaknesses (like having the podiatrist not notice that you have kidney problems), if you want a good start of how to think about competitors, this is the book for you. Just be sure you keep developing yours strategy with additional dimensions after you finish using this analysis.

    If you have read none of Professor Porter's works, this is the one book you should read....more info

  • Enjoyable reading
    When I first read the book in spanish it was like a guide to follow. After 12 years of practice in business consulting. Re-reading it in English was enjoyable because, apart from its examples. My internal dialogue was bringing to my mind my own examples. Aditionally, it was fantactic to discover how much the corporations cited in the book has evolved after 28 years....more info
  • Must read for undergraduates considering strategy consulting
    I was told to read this book by a management consultant when I expressed interest in the profession. It's excellent. It really helped me organize my thoughts when I analyzed cases in case interviews. I can definitely see why it is held in such high-esteem. If you are an undergraduate thinking about doing an analyst program in management consulting, this book is well worth your money....more info
  • A Classic

    This book is perhaps the best overview of competitive strategy analysis ever written. The book together with Porter's "Competitive Advantage" and "Competitive Advantage of Nations" has remained as the model or classic work on business strategy. Although the business world has evolved significantly since 1980 when the book was published, the framework and analysis of the book is still applicable and relevant today. Therefore, this book is a "must-have" for anyone involved in Strategic Planning and Analysis since many of his concepts can easily be applied to the current economic environment, with some necessary adaptations. The framework Porter lays out is a great starting point for any analysis of industries or competitors.

    The book is well written in a clear and straightforward, and easy to understand format, although sometimes I got the sense that the book can tend to repeat itself. However, the clarity of the concepts is a welcome change from some lesser textbooks you sometimes meet in many other books on business strategy, and his repetition serves to reinforce his message.

    However, the rapid advances of technology mean that there is need for some adaptation of some of the concepts to take into account the changing paradigms such as the need to delight the customer with the competitor not being the centre of gravity but rather the customer. In this regard, the book has some limitations, because the competitive dimension is frequently less important than the customer element in the current environment.

    Despite these weaknesses, this book provides an excellent start of how to think about competitors, as long as you keep a close look at the additional dimensions after grasping the analysis.
    ...more info
  • Very valuable book for business leaders and entrepeneurs.
    Understanding the strengths an weaknesses of your competition is the key to just about any field where success is winning over someone else. This book does an excellent job of showing how to evaluate your own strengths and limitations. Finding un-tapped markets and finding the best strategy to tap into them is what this book is about. The book also shows the pitfalls you can get into if you don't focus your market and market to everyone. Highly recommended to business students as well as seasoned businessmen. The sound basics taught in this book can improve the probability of success in your pursuits of profits.


    ...more info
  • The leading foundation of Strategy - review of Porter by Jameson Thottam
    Michael Porter has been the leading figure in development of strategic foresight. His work in multiple corporations, industries, and geographies enables him to provide a unique insight and insider trading secrets on what drives strategic decisions within corporate America and ultimately what drives success.

    As a former VP of Business Development/Strategic Planning with various firms (e.g., Homestore, IndyMac Bank and MedChannel), I have applied his techniques along with various management consulting and data analysis software applications (e.g., Crystal Ball, @Risk, SEC Stat II & SEC STAT III)....

    His work is must have in the arsenal of strategic tools of any professional geared towards strategy. Once a competitive advantage unique to MBA students, Porter has empowered the average individual with the knowledge and skills to truly understand their business in a unique and powerful way.

    Hope this was helpful,

    Jameson Thottam
    (Jameson L. Thottam)
    ...more info
  • If you have to read one book on Strategy, read this one.
    I've read this book many times and in each one I discover new things. Having used Michael Porter's theory to analyse the long term performance of the Brazilian Apparel Industry , the theory has been fully validated to even predict future financial results....more info

 

 
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