Michael Porter and Strategy. ManEc 300 Prof. Bryson. Michael E. Porter’s New Approach. Harvard Business School 1980: The Five Competitive Forces The Competitive Advantage of Nations, 1990. First “strategist,” a field that is, basically, straight economics Enormous popularity.
. Different forces take on prominence, of course, in shaping competition in each industry.
BSZ tell us that without barriers to entry, new firms tend to erode profits within the industry.
They discuss the “degree of rivalry,” the threat of substitutes, buyer and supplier power, and market power and strategy.
See pp. 187ff.
Intense rivalry is related to the presence of a number of factors:
Industry growth is slow, precipitating fights for market share that involve expansion-minded members.
The product or service lacks
differentiation or switching costs, which lock in buyers and protect one combatant from raids on its customers, by another.
1. Positioning the company
Positioning the company so that its capabilities provide the best defense against the competitive force.
2. Influencing the balance
Influencing the balance of the forces through strategic moves, thereby improving the company's position.
Anticipating shifts in the factors underlying the forces and responding to them, with the hope of exploiting change by choosing a strategy appropriate for the new competitive balance before opponents recognize it.
Porter and numerous other authorities have stressed the need to look beyond product to function in defining a business, beyond national boundaries to potential international competition, and beyond the ranks of one's competitors tomorrow.