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The success or failure of any firm depends on competitive advantage-delivering the pr^uct at lower cost or offering unique benefits to the buyer that justify a premium price. But exacUy how does a company achieve cost leadership? And how does it differentiate itself from its rivals?
In an earlier book, Competitive Strategy, Michael E. Porter introduced his acclaimed techniques for analyzing industries and competitors. Now, in Competitive Advantage, Porter begins where Competitive Strategy left off. He describes how firms can actually create and sustain a competitive advantage in their industiy. Competitive Advantage shows managers how to evaluate their competitive position and implement the specific action steps necessary to improve it.
This definitive work presents the concepts and the tools needed to create a competitive advantage in cost or differentiation. It shows how the choice of competitive scope—the breadth of a firm's activities —plays a leading role in creating competitive advantage. It also describes how corporate strategy can work in tandem with business-unit strategy to enhance competitive advantage by coordinating strategies for competing in related industries.
Competitive Advantage introduces a powerful tool that the strategist needs in order to diagnose and enhance competitive advantage: the value chain. Value-chain analysis allows the manager to separate the underlying activities a firm performs in designing, producing, marketing, and distributing its product or service. It is these activities from which competitive advantage ultimately stems. By showing how all the fmn's activities can be examined in this integrated way. Porter provides a new and practical perspective on compétitive sti-ategy.
Using value-chain analysis. Porter shows:
• how to understand the behavior of costs, and how to create and sustain a cost advantage
• how to identify what creates value for the buyer and hence differentiation, and how to carry out a successful differentiation strategy
• how to choose a technological strategy that reflects the significance of the firm's technologies for competitive advantage as well as the benefits and costs of being a technological leader
• how to improve a firm's competitive position by Identifying good"and "bad"competitors, andto decide what market share and mix of competitors
optimizes long-term profitability
(Continued on back flap)
(Continued from front flap)
• how to segment an industry, and formulate profitable and sustainable focus strategies based on that segmentation
• how to analyze the substitution threat in an industry and encourage or defend against substitution
• how to create competitive advantage through corporate strategy by harnessing interrelationships among related industries
• how to manage a diversified firm so that the resistance to achieving strategic irtierrelation-ships among business units can be overcome
• how to cope with strategic uncertainty, using industry scenarios to illuminate the range of possible future competitive environments
• how to defend a firm's competitive position when challenged, and how and when to attack an industry leader
Today's increasingly competitive business environment has already made Porter's Competitive Strategy required reading in top business schools and one of the best-selling business books of recent years. For managers who want to stay one step ahead, and who want specific guidelines for developing sound strategies and putting them into practice, Competitive Advantage is an indispensable reference for the 1980s.
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MICHAEL E. porter teaches at Harvard Business School, where he developed the widely acclaimed MBA courses on competitive strategy He is a consultant to leading companies throughout the world and a guest columnist for The Wall Street Journal.
THE FREE PRESS A Division of Macmillan, Inc. New York
"Michael Porter has a very clear view of the strategic process. He has helped us clarify what kind of values we want to provide our customers, and how our organization can create and sustain afompetitive advantage in the markets we serve. This book is a great resource and a powerful tool."
-JohnA.\bung-
. President and Chief Executive Officer Hewlett-Packard Company
I/Competitive Advantage takes up where Competitive Strategy ends. It goes beyond competitive analysis to show exactly how a (^petitive strategy can be selected and implemented. Once again, H am impressed with Porter's depth of thought. His value-chain poncept has been particularly useful to us in analyzing sources competitive advantage. This book will take the |P strategy field one step further."
® -Victor Millar-
2' Managing Partner-Practice Arthur Andersen Co.
'Michael Porter again shows the power of scholarly thinking for i^}} industry and business. I recommend Competitive Advantage ' ' to business leaders because it gives them strategic but practical
PI solutions to the major issues they confront."
I -Dr. Koji Kobayashi-—
/ ^ Chairman of the Board and Chief Executiv^fficer NEC Corporation
p "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. Porter's new book offers i company strategists a rich framework on which to build their company futures. His two last chapters on attack and defensive strategy are full-dimensional, major contributions. Porter's boote on competitive strategy are the seminal works in the field."
f , --:---Philip Kofler----—-
, ^ Harold T.Martin Professor of Marketing j.L. Kellogg Graduate School of Management Northwestern University
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