The five competitive forces that shape strategy

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  • Publicado : 13 de diciembre de 2010
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In 1979, “The Five Competitive Forces That Shape Strategy”, the first article that Michael E. Porter wrote was published on Harvard Business Review.
It was his first HBRarticle, and it started a revolution in the strategy field. “Porter’s five forces” have shaped a generation of academic research and business practice. He also addresses commonmisunderstandings, provides practical guidance for users of the framework, and offers a deeper view of its implications for strategy today.
Another book to take in account is the best seller “CompetitiveStrategy”. In this book, Michael E. Porter has transformed the theory, practice, and teaching of business strategy throughout the world. Porter introduces one of the most powerful competitive toolsyet developed: his three generic strategies - lowest cost, differentiation, and focus - which bring structure to the task of strategic positioning.
As we have found in the web side of theQFinance the book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” that was written by Michael Porter was about:
❖ The rules of competition based on competitiveforces such as the entry of new competitors, the threat of substitutes, the bargaining power of buyers, and the rivalry among existing competitors.
❖ Bases its argument around three genericstrategies which help avoid losing out to competitors, and five competitive forces, that determine what a company must do to remain competitive.
❖ Shows how differentiation that supposedcompeting on the basis of value added to customers, so that customers will pay a premium to cover higher costs.
❖ Explains how the strength of the competitive forces determines the ability ofcompanies to earn rates of return on investment in excess of the cost of capital.
❖ Offers a guide as to whether some particular strategy, once implemented, can produce worthwhile profits
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