Understanding Michael Porter: The Essential Guide to Competition and Strategy

you have a strategy, you should be able to link it directly to your P&L.

These five forces—the intensity of rivalry among existing competitors, the bargaining power of buyers (the industry’s customers), the bargaining power of suppliers, the threat of substitutes, and the threat of new entrants—determine the industry’s structure,

My advice is to concentrate on deepening and extending a strategic position rather than broadening and ultimately compromising it. Here are some thoughts about how to grow profitably without destroying your strategy. First, never copy.

You begin to see each activity not just as a cost, but as a step that has to add some increment of value to the finished product or service.

“The essence of strategy,” Porter often says, “is choosing what not to do.”

Second, the right analytics. Where does superior performance come from? Porter’s answer can be divided into two parts. The first part is attributable to the structure of the industry in which competition takes place.

Broadly speaking, strategy is the antidote to competition. Specifically, a robust strategy is defined by its ability to pass five basic tests.

Typical Steps in Industry Analysis

Third, expand geographically in a focused way. If you’ve penetrated your strategic opportunity at home, there’s always the rest of the world.

Strategy is a path, not a fixed point. An effective strategy is dynamic.