Competitive Advantage: Creating and Sustaining Superior Performance
The essential complement to the pathbreaking book "Competitive Strategy, " Michael E. Porter's "Competitive Advantage" explores the underpinnings of competitive advantage in the individual firm. With over 30 printings in English and translated into thirteen languages, this second volume in Porter's landmark trilogy describes how a firm actually gains an advantage over its rivals. "Competitive Advantage" introduces a whole new way of understanding what a firm does. Porter's groundbreaking concept of the value chain disaggregates a company into "activities, " or the discrete functions or processes that represent the elemental building blocks of competitive advantage.
Now an essential part of international business thinking, "Competitive Advantage" takes strategy from broad vision to an internally consistent configuration of activities. Its powerful framework provides the tools to understand the drivers of cost and a company's relative cost position. Porter's value chain enables managers to isolate the underlying sources of buyer value that will command a premium price, and the reasons why one product or service substitutes for another. He shows how competitive advantage lies not only in activities themselves but in the way activities relate to each other, to supplier activities, and to customer activities. "Competitive Advantage" also provides for the first time the tools to strategically segment an industry and rigorously assess the competitive logic of diversification.
That the phrases "competitive advantage" and "sustainable competitive advantage" have become commonplace is testimony to the power of Porter's ideas. "Competitive Advantage" has guided countlesscompanies, business school students, and scholars in understanding the roots of competition. Porter's work captures the extraordinary complexity of competition in a way that makes strategy both concrete and actionable.
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y Industry Structure and Buyer Needs
PRINCIPLES OF COMPETITIVE ADVANTAGE
Identifying Value Activities
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achieving interrelationships affect analysis attack barriers benefits bundle business units buyer value buyer's value chain chain saw challenger challenger's channels Chapter competing competitive advantage Competitive Strategy competitor analysis coordination corporate cost advantage cost behavior cost drivers cost leadership cost or differentiation create defensive strategy defensive tactics determine diversified firm economies of scale entrants entry example exploit factors first-mover advantages focus strategy function gain horizontal strategy identify impact important improve industry scenarios industry segmentation industry structure intangible interrelationships interrelation investment involved leader linkages logistic curve logistical lower cost market share ment organizational performance personal computers potential Procter & Gamble product varieties profitability purchased inputs reconfiguration reduce relative cost position retaliation risk role sales force scale economies scenario variables signaling criteria sources Stouffer's substitute suppliers sustainable sustainable competitive advantage switching costs tangible interrelationships technological change technology development tion unbundled uncertainty uniqueness