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Competitive Advantage
Book

Competitive Advantage

Creating and Sustaining Superior Performance

Michael E. Porter
Free Press, 1998
First Edition: 1985
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Editorial Rating

10

Qualities

  • Innovative
  • Applicable

Recommendation

This classic work on competition is indicative of the importance of Michael Porter’s pivotal contributions to management literature. The book seems as fresh and relevant today as when it was first published more than a quarter-century ago. Porter, a professor at the Harvard Business School, is the author of 16 books, and a leading authority on competitive strategy and economic development. His ideas have guided economic policy worldwide, which may account for his nine honorary degrees and numerous awards. This book demonstrates the reasons for his influence. He provides a clear, deftly written, very accessible guide to developing and implementing competitive strategy. He covers the fundamentals of value chains, costs, differentiation, technology, substitution, synergies and more. getAbstract assumes that they told you in business school to reread this frequently as a management touchstone.

Summary

Types of Strategy

A company conducts activities that incur costs in hopes of generating value. Competitive advantage and profit depend on these linked activities in the value chain. Close attention to the value chain enables managers to identify the products or services that customers want most and will pay a premium to obtain. Corporations create competitive advantage by choosing which activities to engage in, and how and where. Your strategy is how you configure those activities.

Companies that decide to compete on the basis of cost arrange their activities differently from firms that decide to compete on the basis of differentiation. This way of looking at a company’s competitive choices bridges what might otherwise be a gap between strategy and execution. Competitive advantage rests upon how well the strategy you choose to execute generates value. Companies can choose among three generic strategies to produce competitive advantage:

  • “Cost leadership” – A firm may seek to become the lowest cost competitor, which it can achieve several ways, depending on its industry. Economies of scale, technology, raw materials and other factors can provide cost...

About the Author

Michael E. Porter is the Bishop William Lawrence University Professor in the Institute for Strategy and Competitiveness at the Harvard Business School, and an international authority on strategy and economic development. He has published 16 books and more than 100 articles.

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