Michael Porter and Strategy. ManEc 300 Prof. Bryson. Michael E. Porter’s New Approach. Who is Michael Porter?. Michael E. Porter’s New Approach. Harvard Business School 1980: The Five Competitive Forces The Competitive Advantage of Nations, 1990.
Who is Michael Porter?
. 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. 202ff.
What factors determine the intensity of competitive rivalries?
Is jockeying especially intense when industry growth is fast?
No, when industry growth is slow, fights are precipitated in the struggle for market share among expansion-minded competitors.
Will the jockeying be intense when the product or service is not differentiated or when switching costs are high?
Not especially! Such costs lock in buyers and protect one combatant from raids on its customers by another.
1. Positioning the company so that its capabilities provide the best defense against the competitive force.
2. 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.