Winner of the "Academy of Management's 1986 George R. Terry Book Award".
Contents
Introduction
Preface
Chapter 1 Competitive Strategy: The Core Concepts
THE STRUCTURAL ANALYSIS OF INDUSTRIES
Industry Structure and Buyer Needs
Industry Structure and the Supply/Demand Balance
GENERIC COMPETITIVE STRATEGIES
Cost Leadership
Differentiation
Focus
Stuck in the Middle
Pursuit of More Than One Generic Strategy
Sustainability
Generic Strategies and Industry Evolution
Generic Strategies and Organizational Structure
Generic Strategies and the Strategic Planning Process
OVERVIEW OF THIS BOOK
PART I PRINCIPLES OF COMPETITIVE ADVANTAGE
Chapter 2 The Value Chain and Competitive Advantage
THE VALUE CHAIN
Identifying Value Activities
Defining the Value Chain
Linkages within The Value Chain
Vertical Linkages
The Buyer's Value Chain
COMPETITIVE SCOPE AND THE VALUE CHAIN
Segment Scope
Vertical Scope
Geographic Scope
Industry Scope
Coalitions and Scope
Competitive Scope and Business Definition
The Value Chain and Industry Structure
THE VALUE CHAIN AND ORGANIZATIONAL STRUCTURE
Chapter 3 Cost Advantage
THE VALUE CHAIN AND COST ANALYSIS
Defining the Value Chain for Cost Analysis
Assigning Costs and Assets
First Cut Analysis of Costs
COST BEHAVIOR
Cost Drivers
The Cost of Purchased Inputs
Segment Cost Behavior
Cost Dynamics
COST ADVANTAGE
Determining the Relative Cost of Competitors
Gaining Cost Advantage
Sustainability of Cost Advantage
Implementation and Cost Advantage
Pitfalls in Cost Leadership Strategies
STEPS IN STRATEGIC COST ANALYSIS
Chapter 4 Differentiation
SOURCES OF DIFFERENTIATION
Differentiation and The Value Chain
Drivers of Uniqueness
THE COST OF DIFFERENTIATION
BUYER VALUE AND DIFFERENTIATION
Buyer Value
The Value Chain and Buyer Value
Lowering Buyer Cost
Raising Buyer Performance
Buyer Perception of Value
Buyer Value and the Real Buyer
Buyer Purchase Criteria
Identifying Purchase Criteria
DIFFERENTIATION STRATEGY
Routes to Differentiation
The Sustainability of Differentiation
Pitfalls in Differentiation
STEPS IN DIFFERENTIATION
Chapter 5 Technology and Competitive Advantage
TECHNOLOGY AND COMPETITION
Technology and The Value Chain
Technology and Competitive Advantage
Technology and Industry Structure
TECHNOLOGY STRATEGY
The Choice of Technologies to Develop
Technological Leadership or Followership
Licensing of Technology
TECHNOLOGICAL EVOLUTION
Continuous Versus Discontinuous Technological Evolution
Forecasting Technological Evolution
FORMULATING TECHNOLOGICAL STRATEGY
Chapter 6 Competitor Selection
THE STRATEGIC BENEFITS OF COMPETITORS
Increasing Competitive Advantage
Improving Current Industry Structure
Aiding Market Development
Deterring Entry
WHAT MAKES A "GOOD" COMPETITOR?
Tests of a Good Competitor
"Good" Market Leaders
Diagnosing Good Competitors
INFLUENCING THE PATTERN OF COMPETITORS
Damaging Good Competitors in Battling Bad Ones
Changing Bad Competitors into Good Ones
THE OPTIMAL MARKET CONFIGURATION
The Optimal Competitor Configuration
Maintaining Competitor Viability
Moving toward the Ideal Competitor Configuration
Maintaining Industry Stability
PITFALLS IN COMPETITOR SELECTION
PART II COMPETITIVE SCOPE WITHIN AN INDUSTRY
Chapter 7 Industry Segmentation and Competitive
Advantage
BASES FOR INDUSTRY SEGMENTATION
Structural Bases For Segmentation
Segmentation Variables
Finding New Segments
THE INDUSTRY SEGMENTATION MATRIX
Relationships Among Segmentation Variables
Combining Segmentation Matrices
INDUSTRY SEGMENTATION AND COMPETITIVE STRATEGY
The Attractiveness of a Segment
Segment Interrelationships
Segment Interrelationships and Broadly-Targeted Strategies
The Choice of Focus
The Feasibility of New Segments to Focus On
The Sustainability of a Focus Strategy
Pitfalls and Opportunities for Focusers and Broadly-Targeted
Competitors
INDUSTRY SEGMENTATION AND INDUSTRY
DEFINITION
Chapter 8 Substitution
IDENTIFYING SUBSTITUTES
THE ECONOMICS OF SUBSTITUTION
Relative Value/Price
Switching Costs
Buyer Propensity to Substitute
Segmentation and Substitution
CHANGES IN THE SUBSTITUTION THREAT
Substitution and Overall Industry Demand
Substitution and Industry Structure
THE PATH OF SUBSTITUTION
Segmentation and the Substitution Path
Substitution Forecasting Models
SUBSTITUTION AND COMPETITIVE STRATEGY
Promoting Substitution
Defense Against Substitutes
Industry Versus Firm Substitution Strategy
Pitfalls in Strategy Against Substitutes
PART III CORPORATE STRATEGY AND COMPETITIVE ADVANTAGE
Chapter 9 Interrelationships among Business Units
THE GROWING IMPORTANCE OF HORIZONTAL STRATEGY
INTERRELATIONSHIPS AMONG BUSINESS UNITS
TANGIBLE INTERRELATIONSHIPS
Sharing and Competitive Advantage
The Costs of Sharing
Difficulty of Matching
Identifying Tangible Interrelationships
INTANGIBLE INTERRELATIONSHIPS
COMPETITOR INTERRELATIONSHIPS
Multipoint Competitors in Unrelated Industries
Multipoint Competition in Related Industries
Competitors with Different Patterns of Interrelationships
Forecasting Potential Competitors
Chapter 10 Horizontal Strategy
THE NEED FOR EXPLICIT HORIZONTAL STRATEGY
Formulating Horizontal Strategy
INTERRELATIONSHIPS AND DIVERSIFICATION STRATEGY
Diversification Based on Tangible Interrelationships
Diversification Through Beachheads
Diversification and Corporate Resources
PITFALLS IN HORIZONTAL STRATEGY
Pitfalls in Ignoring Interrelationships
Pitfalls in Pursuing Interrelationships
Chapter 11 Achieving Interrelationships
IMPEDIMENTS TO ACHIEVING INTERRELATIONSHIPS
Sources of Impediments
Interrelationships and Equity
Differences in Impediments among Firms
ORGANIZATIONAL MECHANISMS FOR ACHIEVING
INTERRELATIONSHIPS
Horizontal Structure
Horizontal Systems
Horizontal Human Resource Practices
Horizontal Conflict Resolution Processes
The Corporate Role in Facilitating Interrelationships
Interrelationships and the Mode of Diversification
MANAGING HORIZONTAL ORGANIZATION
Promising Examples
Japanese Firms and Interrelationships
A New Organizational Form
Chapter 12 Complementary Products and Competitive
Advantage
CONTROL OVER COMPLEMENTARY PRODUCTS
Competitive Advantages From Controlling Complements
Problems of Controlling Complements
Control Over Complements and Industry Evolution
Identifying Strategically Important Complements
BUNDLING
Competitive Advantages of Bundling
Risks of Bundling
Bundled Versus Unbundled Strategies
Bundling and Industry Evolution
Strategic Implications of Bundling
CROSS SUBSIDIZATION
Conditions Favoring Cross Subsidization
Risks of Cross Subsidization
Cross Subsidization and Industry Evolution
Strategic Implications of Cross Subsidization
COMPLEMENTS AND COMPETITIVE STRATEGY
PART IV IMPLICATIONS FOR OFFENSIVE AND DEFENSIVE COMPETITIVE
STRATEGY
Chapter 13 Industry Scenarios and Competitive Strategy under
Uncertainty
Scenarios as a Planning Tool
Industry Scenarios
CONSTRUCTING INDUSTRY SCENARIOS
Identifying Industry Uncertainties
Independent Versus Dependent Uncertainties
Identifying a Set of Scenarios
Consistency of Assumptions
Analyzing Scenarios
Introducing Competitor Behavior into Scenarios
The Number of Scenarios To Analyze
Attaching Probabilities to Scenarios
Summary Characteristics of Industry Scenarios
INDUSTRY SCENARIOS AND COMPETITIVE STRATEGY
Strategic Approaches Under Scenarios
Combined and Sequenced Strategies
The Choice of Strategy Under Industry Scenarios
Scenario Variables and Market Intelligence
SCENARIOS AND THE PLANNING PROCESS
Corporate Role in Constructing Industry Scenarios
Industry Scenarios and Creativity
Chapter 14 Defensive Strategy
THE PROCESS OF ENTRY OR REPOSITIONING
DEFENSIVE TACTICS
Raising Structural Barriers
Increasing Expected Retaliation
Lowering the Inducement for Attack
EVALUATING DEFENSIVE TACTICS
DEFENSIVE STRATEGY
Deterrence
Response
Response to Price Cutting
Defense or Disinvest
Pitfalls in Defense
Chapter 15 Attacking an Industry Leader
CONDITIONS FOR ATTACKING A LEADER
AVENUES FOR ATTACKING LEADERS
Reconfiguration
Redefinition
Pure Spending
Alliances To Attack Leaders
IMPEDIMENTS To LEADER RETALIATION
SIGNALS OF LEADER VULNERABILITY
Industry Signals
Leader Signals
ATTACKING LEADERS AND INDUSTRY STRUCTURE
Bibliography
Index
About the Author
Michael E. Porter, one of the world's leading authorities on competitive strategy and international competitiveness, is the C. Roland Christensen Professor of Business Administration at the Harvard Business School. In 1983, Professor Porter was appointed to President Reagan's Commission on Industrial Competitiveness, the initiative that triggered the competitiveness debate in America. He serves as an advisor to heads of state, governors, mayors, and CEOs throughout the world. The recipient of the Wells Prize in Economics, the Adam Smith Award, three McKinsey Awards, and honorary doctorates from the Stockholm School of Economics and six other universities, Porter is the author of fourteen books, among them Competitive Strategy, The Competitive Advantage of Nations, and Cases in Competitive Strategy, all published by The Free Press. He lives in Brookline, Massachusetts.
Financial Times The most influential management book of the past
quarter century....A veritable goldmine of analytical concepts and
tools to help companies get a much clearer grasp of how they can
create and sustain competitive advantage.
Philip Kotler S.C. Johnson & Son, Distinguished Professor of
International Marketing, Northwestern University Michael Porter has
done it again. Having defined the 'what' and 'why' of competitive
strategy in his earlier book, he now defines the 'how' in
Competitive Advantage.
Newsday A sharp, aggressive and cogently reasoned book about
competition that your smarter rivals will try to get to first.
The Washington Post A brilliant structural analysis of what
competitive advantage might mean....
Antitrust Law & Economics Review A superb guide for business
managers but also necessary background study for judges, antitrust
agency officials, and economic experts in antitrust cases.
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