Summary of "Competitive Strategy: Techniques for Analyzing Industries and Competitors" by M.E. Porter

Rezension / Literaturbericht , 2018 , 5 Seiten , Note: 4.0

VWL - Internationale Wirtschaftsbeziehungen

The book "Competitive strategy: techniques for analyzing industries and competitors: with a new introduction" by Michael E. Porter (New York: Free Press, c1980. 396pp.) is the epitome of competitive strategies. The author explains the dynamism of competition within the industry. Furthermore, he developed analyzing tools step by step to examine a branch on the basis of practical examples. The author, Michael E. Porter, was born in 1947 and is a professor at the Harvard Business School where he has the Institute for Strategy and Competitiveness.

Competitive strategy: techniques for analyzing industries and competitors: with a new introduction. Michael E. Porter. New York: Free Press, c1980. 396pp.

The book is the epitome of competitive strategies. The author explains the dynamism of competition within industry. Furthermore, he developed analyzing tools step by step to examine a branch on the basis of practical examples. The author, Michael E. Porter, was born in 1947 and is a professor at the Harvard Business School where he has the Institute for Strategy and Competitiveness (The Economist, 2008).

Michael E. Porter’s book (Porter, 1980) is divided into three parts: general analytical techniques, generic industry environments, and strategic decisions. The first chapter introduces the five forces model that is determined by the industry structure. The forces the threat of new entrants, the bargaining power of buyers, the threat of substitute products or services, the bargaining power of suppliers, and the rivalry among existing firms are described by explaining their different forms and variants in the market, their sources, and their influence on the industry structure. The second chapter deals with the three generic competitive strategies overall cost leadership, differentiation, and focus that concentrate on finding a position in the industry. The author marks out their characteristics, their requirements, as well as their risks. The competitor analysis is the topic of the third chapter. The represented framework focuses on the four corners model that includes distinct competitors, their (future) goals, their assumptions, their strengths and weaknesses, as well as their current strategies. It aims to develop a company’s strategy based on that information. The following chapter presents forms of market signals like announcements and public discussions. Porter explains how to react to those signals and how to involve it in the competitor framework. The fifth chapter elucidates the dependence of the competitors and their affection on the industry by giving explanations of different moves. They can appear as non-threatening, threatening, defensive moves or as commitment. In the sixth chapter, he intensifies the knowledge from the first chapter by presenting buyer selections and purchasing strategies. It captures aspects of the purchasing needs, the growth potential, the structural position, and the cost of servicing as well as how they affect the target groups and suppliers. The structural analysis within industries is described in the seventh chapter and is related to the third chapter. It develops an analysis by using various dimensions like specialization, brand identification, channel selection, etc. that are used to divide the industry into different strategic groups and to define a competitive strategy within a group. The eighth chapter provides techniques to envision the evolution within industry. Furthermore, it describes how it can be used for the development of strategy. Porter explains basic concepts like the product lifecycle, driving forces, key relationships and their influence on the industry. The chapters from nine to thirteen address five different environments industry fragmented industries, emerging industries, the transition to industry maturity, declining industries, and global industries. Porter points out how the competitive strategy differs in every industry by explaining their structures and competition, their key issues, their strategic alternatives as well as their pitfalls. The chapters elucidate how to adjust the developed based on the environment. The strategic decisions that have been developed by Porter are presented in the third part of the book. The fourteenth chapter deals with the vertical integration and its benefits, costs, two variants, long-term contracts, economics, and illusions. The fifteenth chapter is about the major capacity expansion. It presents elements that are necessary for decision makings, the causes of overbuilding expansion as well as the pre-emptive strategies. The entry into new markets is the topic of the sixteenth chapter. Porter explains two different entries, one through internal development and the other one through acquisition. Furthermore, it gives a detailed explanation of sequenced entry. The strategic decisions of the last three chapters are based on the stage where an industry is positioned.

After almost 40 years, the Michael E. Porter’s competitive strategies still take on an important role in today’s modern business environment. From a startup and existing company perspective, (https://www.sba.gov/business-guide) starting a business means to create a business plan to reflect about the product, analyze customers and market, as well as figure out a strategy or rather continuous adjustments on the strategy. These are the main elements as well as the foundation a company builds on and needs to have control over. Thus, it requires deliberating the strategy by using inter alia the five forces model, the three generic competitive strategies, or framework for the competitor analysis. Daily and recurring tasks like ordering ingredients from suppliers or serving a customer are based on Porter’s main concepts and need to overthink again and again at specific intervals. In addition, it requires more than a well- thought business plan and brilliant business idea in today’s economy, and that brings me to a point where Porter’s developed tools decrease their relevancies. From a historical perspective, (https://www.history.com/topics/1980s) the eighties were characterized by consumerism and materialism and a periodic growth of the global economy. Furthermore, the advent of the internet has been invented in the early eighties so, all in all, lots of opportunities for business founders after rough economy decades with a high unemployment rate and a deep recession, but that also leads to an intense competition. In comparison, the twenty-first-centuries’ economy (https://www.weforum.org/agenda/2017) is challenged by, just to name a few difficulties, an escalating visibility of prices, products and knowledge, an intensified internetization, an increasing information and communication revolution, and strong affecting social developments. This fast-moving environment has a huge impact on modern business strategies since there are forced to adjust their strategies based on the given situation. Here, it struggles to uses Porter’s main concepts since they do not capture the significance of the digitalization rise or the intensity of globalization with their individual movements.

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• Hochschule: Harris University (Harrisburg University of Science & Technology)
• Note: 4.0
• Autor: Friederike Berg (Autor:in)
• Erscheinungsjahr: 2018
• Seiten: 5
• Katalognummer: V509612
• ISBN (eBook): 9783346091581
• Sprache: Englisch
• Schlagworte: summary, competitive, strategy, techniques, analyzing, industries, competitors, porter