It is so dominant that leaders seeking to develop and pursue winning strategies should begin by ignoring the others and focus only on it. That force is barriers to entry—the force that underlies Porter’s “Potential Entrants.”

Most companies that manage to grow and still achieve a high level of profitability do it in one of three ways. They replicate their local advantages in multiple markets, like Coca-Cola. They continue to focus within their product space as that space itself becomes larger, like Intel. Or, like Wal-Mart and Microsoft, they gradually expand their acti

the approach we recommend here, the central question is whether, in the market in which the firm operates or is considering entering, competitive advantages exist. If they are present, what are they and who has them? We have described two tests for their existence: stable market shares and a high return on investment for the dominant incumbent firm

Constant pursuit of operational efficiency is essential for companies in markets without competitive advantages.

At its core, strategic thinking is about creating, protecting, and exploiting competitive advantages.

the average absolute share change exceeds 5 percentage points, there are no barriers to entry; if the share change is 2 percentage points or less, the barriers are formidable.

Strategies are indeed plans for achieving and sustaining success. But they are not just any ideas for how to make a product or service and sell it profitably to customers. Rather, strategies are those plans that specifically focus on the actions and responses of competitors.

Without the protection of barriers to entry, the only option a company has is to run itself as efficiently and effectively as possible.

With a universe of companies seeking profitable opportunities for investment, the returns in an unprotected industry will be driven down to levels where there is no “economic profit,” that is, no returns above the costs of the invested capital. If demand conditions enable any single firm to earn unusually high returns, other companies will notice t