Understanding Michael Porter: The Essential Guide to Competition and Strategy

When an industry converges around a standard offering, the

Strategy is the antidote to competitive rivalry.

those differences can take two distinct forms. A company can be better at performing the same configuration of activities, or it can choose a different configuration of activities. By now, of course, you recognize that the first approach is competition to be the best. And by now, we are in a better position to understand why this approach is unlike

Will customers incur any switching costs in moving from one supplier to another?

The essence of strategy is to create your own path.

you have a competitive advantage, then, your profitability will be sustainably higher than the industry average (see figure 3-1). You will be able to command a higher relative price or to operate at a lower relative cost, or both. Conversely, if a company is less profitable than its rivals, by definition it has lower relative prices or higher relat

This misses the mark in important ways. For Porter, competitive advantage is not about trouncing rivals, it’s about creating superior value. Moreover, the term is both concrete and specific. If you have a real competitive advantage, it means that compared with rivals, you operate at a lower cost, command a premium price, or both.

How can you position yourself in relation to the five forces? Can you find a position where the forces are weakest? Can you exploit industry change? Can you reshape structure in your favor?

When you assess buyer power, the channels through which products are delivered can be as important as the end users. This is especially true when the channel influences the purchase decisions of the end-user customers.