Porter Strategy Quotes

The essence of strategy is choosing what not to do.

consumers tend to be more price sensitive if they are purchasing products that are undifferentiated, expensive relative to their incomes, or of a sort where quality is not particularly important to them.

Approaches to differentiating can take many forms: design or brand image, technology, features, customer service, dealer network, or other dimensions.

quality differentials have a tendency to erode as an industry matures

This is analogous to the situation in which the robber says, “stick ’em up, I want your money,” and the deranged-looking victim says “If you take it, I will explode this bomb and kill us both!

Competition on dimensions other than price - on product features, support services, delivery time, or brand image, for instance - is less likely to erode profitability because it improves customer value and can support higher prices. p.32

Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.

Strategy is the creation of a unique and valuable position, involving a different set of activities.

Competing to be the best feeds on imitation. Competing to be unique thrives on innovation.

Strategy is making trade-offs in competing. The essence of strategy is choosing what not to do.

Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.

Strategy is about making choices; it’s about deliberately choosing to be different.

Understanding the competitive forces, and their underlying causes, reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition (and profitability) over time. P. 26

The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. The most salient force, however, is not always obvious. P. 26

Managers must clearly distinguish operational effectiveness from strategy.

Strategy is about making choices; it's about deliberately choosing to be different.

If a firm can spot an industry in which the fragmented structure does not reflect the underlying economics of competition, this can provide a most significant strategic opportunity. A company can enter such an industry cheaply because of its initial structure. Since there are no underlying economic causes of fragmentation, none of the investment costs or risks of innovations to change underlying economic structure need be borne.

Michael Porter’s best, when he said, “The essence of strategy is choosing what not to do.

Overcoming fragmentation can be a very significant strategic opportunity. The payoff to consolidating a fragmented industry can be high because the costs of entry into it are by definition low, and there tend to be small and relatively weak competitors who offer little threat of retaliation. I have stressed earlier in this book that an industry must be viewed as an interrelated system, and this fact applies to fragmented industries as well. An industry can be fragmented because of only one of the factors listed in the previous section. If this fundamental block to consolidation can be somehow overcome, this often triggers a process by which the entire structure of the industry changes.

A strategy is an internally consistent configuration of activities that distinguishes a firm from its rivals.

In essence, the job of the strategist is to understand and cope with competition. P. 25

Substitutes are always present, but they are easy to overlook because they may appear to be very different from the industry’s product p.31

High rivalry limits the profitability of an industry P.32

A common mistake in strategy is to choose the same core competences as everyone else in your industry.

Early entry is appropriate when the following general circumstances hold:   Image and reputation of the firm are important to the buyer, and the firm can develop an enhanced reputation by being a pioneer. Early entry can initiate the learning process in a business in which the learning curve is important, experience is difficult to imitate, and it will not be nullified by successive technological generations. Customer loyalty will be great, so that benefits will accrue to the firm that sells to the customer first. Absolute cost advantages can be gained by early commitment to supplies of raw materials, distribution channels, and so on.

The more competitors perceive the prospect of dogged, bitter retaliation to the point of severely hurting everyone’s profits, the less likely they are of initiating the chain of events in the first place. This is analogous to the situation in which the robber says, “stick ’em up, I want your money,” and the deranged-looking victim says “If you take it, I will explode this bomb and kill us both!

The first test of a strategy is whether your value proposition is different from your rivals. If you are trying to serve the same customers and meet the same needs and sell at the same relative price, then by Porter’s definition, you don’t have a strategy.

Another key strategic concept deriving from competitor analysis is creating a situation of mixed motives or conflicting goals for competitors. This strategy involves finding moves for which retaliation, though effective, would hurt the competitor’s broader position. For example, as IBM responds to the threat of the minicomputer with its own minicomputer, it may hasten the decline in growth of its large computers and accelerate the changeover to minicomputers. Placing competitors in a situation of conflicting goals can be a very effective strategic approach for attacking established firms that have been successful in their markets. Small firms and newly entered firms often have very little legacy in the existing strategies in the industry and can reap great rewards from finding strategies that penalize competitors for their stake in these existing strategies.

Demand for a product is affected by the cost and quality, broadly defined, of substitute products. If the cost of a substitute falls in relative terms, or if its ability improves to satisfy the buyer’s needs, industry growth will be adversely affected (and vice versa). Examples are the inroads that television and radio have made on the demand for live concerts by symphony orchestras and other performing groups; the growth in demand for magazine advertising space as television advertising rates climb sharply and prime advertising television time becomes increasingly scarce; and the depressing effect of rising prices on the demand of such products as chocolate candy and soft drinks relative to their substitutes.

Understanding industry structure is also essential to effective strategic positioning P. 26

Instead of competing to be the best, companies can—and should—compete to be unique. This concept is all about value.

In business, multiple winners can thrive and coexist. Competition focuses more on meeting customers needs than on demolishing rivals. Just look around. Because there are so many needs to serve, there are many ways to win.

Empirical evidence suggests that the relationship between the profitability of larger share and smaller share depends on the industry. Exhibit 7-1 compares the rate of return on equity of the largest firms accounting for at least 30 percent of industry sales (leaders) to the rate of return on equity of the medium-sized firms in the same industry (followers). In this calculation small firms with assets less than $500,000 were excluded. Although some of the industries in the sample are overly broad, it is striking that followers were noticeably more profitable than leaders in 15 of 38 industries. The industries in which the followers’ rates of return were higher appear generally to be those where economies of scale are either not great or absent (clothing, footwear, pottery, meat products, carpets) and/or those that are highly segmented (optical, medical and ophthalmic goods, liquor, periodicals, carpets, and toys and sporting goods). The industries in which leaders’ rates of return are higher seem to be generally those with heavy advertising (soap; perfumes; soft drinks; grain mill products, i.e., cereal; cutlery) and/or research outlays and production economies of scale (radio and television, drugs, photographic equipment). This outcome is as we would expect.

Insight into customers’ needs is important, but it’s not enough. The essence of strategy and competitive advantage lies in the activities, in choosing to perform activities differently or to perform different activities from those of rivals. Each of the companies we’ve just described has done just that, tailoring their value chains to their value propositions.

Whereas penetration most often means that industry demand will level off, for durable goods, achieving penetration can lead to an abrupt drop in industry demand. After most potential customers have purchased the product, its durability implies that few will buy replacements for a number of years. If industry penetration has been rapid, this situation may translate into several very lean years for industry demand. For example, industry sales of snowmobiles, which underwent very rapid penetration, fell from 425,000 units per year in the peak year (1970-1971) to 125,000 to 200,000 units per year in 1976-1977.6 Recreational vehicles underwent a similar though not quite so dramatic decline. The relation between the growth rate after penetration and growth before penetration will be a function of how fast penetration has been reached and the average time before replacement, and this figure can be calculated.

Porter defines the value proposition as the answer to three fundamental questions (see figure 4-1): Which customers are you going to serve? Which needs are you going to meet? What relative price will provide acceptable value for customers and acceptable profitability for the company?

A firm may achieve differentiation, yet this differentiation will usually sustain only so much of a price differential. Thus if a differentiated firm gets too far behind in cost due to technological change or simply inattention, the low cost firm may be in a position to make major inroads. For example, Kawasaki and other Japanese motorcycle producers have been able to successfully attack differentiated producers such as Harley-Davidson and Triumph in large motorcycles by offering major cost savings to buyers.

Some managers mistake “customer focus” to mean they must serve all customer needs or respond to every request from distribution channels.

If the forces are intense, (..) almost no company earns attractive returns on investment. If the forces are benign, (..) many companies are profitable. P. 25

Cash Cows: Businesses with high relative share in low-growth markets will produce healthy cash flow, which can be used to fund other, developing businesses.

Strategy becomes the particular array of activities aligned to deliver a particular mix of value to a chosen array of customers.

The point of industry analysis is not to declare the industry attractive or unattractive but to understand the underpinnings of competition and the root causes of profitability. P.29

General management is more than the stewardship of individual functions. Its core is strategy: defining and communicating the company’s unique position, making trade-offs, and forging fit among activities.

Indeed, one of the most important functions of an explicit, communicated strategy is to guide employees in making choices that arise because of trade-offs in their individual activities and in day-to-day decisions. Improving

As important as the dimensions of rivalry is whether rivals compete on the same dimensions. When all or many competitors aim to meet the same needs or compete on the same attributes, the result is zero-sum competition. P. 33

The key to competitive success—for businesses and nonprofits alike—lies in an organization’s ability to create unique value. Porter’s prescription: aim to be unique, not best. Creating value, not beating rivals, is at the heart of competition.

Although external changes can be the problem, the greater threat to strategy often comes from within. A sound strategy is undermined by a misguided view of competition, by organizational failures, and, especially, by the desire to grow. Managers

Operational effectiveness: necessary but not sufficient Operational effectiveness and strategy are both essential to superior performance, which, after all, is the primary goal of any enterprise. But they work in very different ways. A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers or create comparable value at a lower cost, or do both. The arithmetic of superior profitability then follows: delivering greater value allows a company to charge higher average unit prices; greater efficiency results in lower average unit costs. Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell, and deliver their products or services, such as calling on customers, assembling final products, and training employees. Cost is generated by performing activities, and cost advantage arises from performing particular activities more

Managers at lower levels lack the perspective and the confidence to maintain a strategy. There will be constant pressures to compromise, relax trade-offs, and emulate rivals. One of the leader’s jobs is to teach others in the organization about strategy—and to say no. Strategy

Memorizing the five forces won’t make you a better business thinker; it will only help you to sound like one. It matters that you grasp the deeper point: there are a limited number of structural forces at work in every industry that systematically impact profitability in a predictable direction.

Thus a low-cost position protects the firm against all five competitive forces because bargaining can only continue to erode profits until those of the next most efficient competitor are eliminated, and because the less efficient competitors will suffer first in the face of competitive pressures.

From my examination of many declining industries, the firms that seem to be the most objective about managing the decline process are those that also participate in the substitute industry. They have a clearer perception concerning the prospects of the substitute product and the threat of decline.

We usually think of suppliers as other firms, but labor must be recognized as a supplier as well, and one that exerts great power in many industries. There is substantial empirical evidence that scarce, highly skilled employees and/or tightly unionized labor can bargain away a significant fraction of potential profits in an industry.

For example, in intravenous (IV) solutions and kits for use in hospitals, procedures for attaching solutions to patients differ among competitive products and the hardware for hanging the IV bottles are not compatible. Here switching encounters great resistance from nurses responsible for administering the treatment and requires new investments in hardware.

Porter noted that powerful and sustainable competitive advantage is unlikely to arise from any one capability (e.g., having the best sales force in the industry or the best technology in the industry), but rather from a set of capabilities that both fit with one another (i.e., that don’t conflict with one another) and actually reinforce one another (i.e., that make each other stronger than they would be alone).

Finding a situation that catches the key competitor or competitors with conflicting goals is at the heart of many company success stories. The slow Swiss reaction to the Timex watch provides an example. Timex sold its watches through drugstores, rather than through the traditional jewelry store outlets for watches, and emphasized very low cost, the need for no repair, and the fact that a watch was not a status item but a functional part of the wardrobe. The strong sales of the Timex watch eventually threatened the financial and growth goals of the Swiss, but it also raised an important dilemma for them were they to retaliate against it directly. The Swiss had a big stake in the jewelry store as a channel and a large investment in the Swiss image of the watch as a piece of fine precision jewelry. Aggressive retaliation against Timex would have helped legitimize the Timex concept, threatened the needed cooperation of jewelers in selling Swiss watches, and blurred the Swiss product image. Thus the Swiss retaliation to Timex never really came. There are many other examples of this principle at work. Volkswagen’s and American Motor’s early strategies of producing a stripped-down basic transportation vehicle with few style changes created a similar dilemma for the Big Three auto producers. They had a strategy built on trade-up and frequent model changes. Bic’s recent introduction of the disposable razor has put Gillette in a difficult position: if it reacts it may cut into the sales of another product in its broad line of razors, a dilemma Bic does not face.4 Finally, IBM has been reluctant to jump into minicomputers because the move will jeopardize its sales of larger mainframe computers.

Within most well-established companies is a core of uniqueness. It is identified by answering questions such as the following: • Which of our product or service varieties are the most distinctive? • Which of our product or service varieties are the most profitable? • Which of our customers are the most satisfied? • Which customers, channels, or purchase occasions are the most profitable? • Which of the activities in our value chain are the most different and effective? Around

In the security guard industry, for example, electronic alarm systems represent a potent substitute. Moreover, they can only become more important since labor-intensive guard services face inevitable cost escalation, whereas electronic systems are highly likely to improve in performance and decline in costs. Here, the appropriate response of security guard firms is probably to offer packages of guards and electronic systems, based on a redefinition of the security guard as a skilled operator, rather than to try to outcompete electronic systems across the board.

Strategy involves creating “fit” among a company’s activities. Fit has to do with the ways a company’s activities interact and reinforce one another. For example, Vanguard Group aligns all of its activities with a low-cost strategy; it distributes funds directly to consumers and minimizes portfolio turnover. Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them. When Continental Lite tried to match a few of Southwest Airlines’ activities, but not the whole interlocking system, the results were disastrous.

If buyers either are partially integrated or pose a credible threat of backward integration, they are in a position to demand bargaining concessions.9 The major automobile producers, General Motors and Ford, are well known for using the threat of self-manufacture as a bargaining lever. They engage in the practice of tapered integration, that is, producing some of their needs for a given component in-house and purchasing the rest from outside suppliers. Not only is their threat of further integration particularly credible, but also partial manufacture in-house gives them a detailed knowledge of costs which is a great aid in negotiation. Buyer power can be partially neutralized when firms in the industry offer a threat of forward integration into the buyers’ industry.

If close local control and supervision of operations is essential to success the small firm may have an edge. In some industries, particularly services like nightclubs and eating places, an intense amount of close, personal supervision seems to be required. Absentee management works less effectively in such businesses, as a general rule, than an owner-manager who maintains close control over a relatively small operation.1 Smaller firms are often more efficient where personal service is the key to the business. The quality of personal service and the customer’s perception that individualized, responsive service is being provided often seem to decline with the size of the firm once a threshold is reached. This factor seems to lead to fragmentation in such industries as beauty care and consulting.

Perhaps the single most important determinant of the receptivity of the buyer to a new product or service is the nature of the expected benefit. We can imagine a continuum of benefits ranging from a new product that offers a performance advantage unachievable through other means to one that offers solely a cost advantage. Intermediate cases are those offering an advantage in performance but one that could be replicated through other means at higher cost. The earliest markets purchasing a new product, other things being equal, are usually those in which the advantage is one of performance. This situation occurs because the achievement of a cost advantage in practice is often viewed with suspicion when buyers confront the newness, uncertainty, and often erratic performance of the emerging industry,

Once a competitor’s move has occurred, the denial of an adequate base for the competitor to meet its goals, coupled with the expectation that this state of affairs will continue, can cause the competitor to withdraw. New entrants, for example, usually have some targets for growth, market share, and ROI, and some time horizon for achieving them. If a new entrant is denied its targets and becomes convinced that it will be a long time before they are met, then it may withdraw or deescalate. Tactics for denying a base include strong price competition, heavy expenditures on research, and so on. Attacking new products in the test-market phase can be an effective way to foretell a firm’s future willingness to fight and can be less expensive than waiting for the introduction to actually occur. Another tactic is using special deals to load customers up with inventory, thereby removing the market for the product and raising the short-run cost of entry. It can be worth paying a substantial short-run price to deny a base if a firm’s market position is threatened. Essential to such a strategy, however, is a good hypothesis about what a competitor’s performance targets and time horizon are. An example of such a situation may be Gillette’s withdrawal from digital watches. Although claiming it had won significant market shares in test markets, Gillette bowed out, citing the substantial investments required to develop technology and margins lower than those available in other areas of its business. Texas Instruments’ strategy of aggressive pricing and rapid technological development in digital watches probably had a substantial impact on this decision.

In many industries, however, what some call hypercompetition is a self-inflicted wound, not the inevitable outcome of a changing paradigm of competition. The root of the problem is the failure to distinguish between operational effectiveness and strategy. The quest for productivity, quality, and speed has spawned a remarkable number of management tools and techniques: total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, change management. Although the resulting operational improvements have often been dramatic, many companies have been frustrated by their inability to translate those gains into sustainable profitability. And bit by bit, almost imperceptibly, management tools have taken the place of strategy. As managers push to improve on all fronts, they move farther away from viable competitive positions. Operational effectiveness: necessary

The myriad activities that go into creating, producing, selling, and delivering a product or service are the basic units of competitive advantage. Operational effectiveness means performing these activities better—that is, faster, or with fewer inputs and defects—than rivals. Companies can reap enormous advantages from operational effectiveness, as Japanese firms demonstrated in the 1970s and 1980s with such practices as total quality management and continuous improvement. But from a competitive standpoint, the problem with operational effectiveness is that best practices are easily emulated. As all competitors in an industry adopt them, the productivity frontier—the maximum value a company can deliver at a given cost, given the best available technology, skills, and management techniques—shifts outward, lowering costs and improving value at the same time. Such competition produces absolute improvement in operational effectiveness, but relative improvement for no one. And the more benchmarking that companies do, the more competitive convergence you have—that is, the more indistinguishable companies are from one another. Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways.

The beef cattle industry provides a good example of how a fragmented industry can change in structure. The industry has historically been characterized by a large number of small ranchers grazing cattle on rangelands and transporting them to a meat-packer for processing. Raising cattle has traditionally involved few economies of scale; if anything, there could well be diseconomies of controlling a very large herd and moving it from area to area. However, technological developments have led to the wider use of the feedlot as an alternative process for fattening cattle. Under carefully controlled conditions, the feedlot has proven to be a far cheaper way to put weight on animals. Constructing feedlots requires large capital outlays, though, and there appear to be significant economies of scale in their operation. As a result, some large beef growers, such as Iowa Beef and Monfort, are emerging and the industry is concentrating. These large growers are beginning to be large enough to backward integrate into processing of feeds and to forward integrate into meat processing and distribution. The latter has led to the development of brand names. In this industry the fundamental cause of fragmentation was the production technology utilized for fattening cattle. Once this impediment to consolidation was removed, a process of structural change was triggered which has encompassed many elements of industry structure going far beyond feedlots alone.

According to strategy guru Michael Porter of the Harvard Business School, successful business strategies are at the opposite poles of each of two choices: (1) aim to dominate the entire industry or, alternately, target only the few segments in which it can excel; (2) choose between winning by marketing superior products or, alternately, by offering bargain prices. Companies run into trouble when they are not clear about whether they are serving the whole market or just focusing on specific niches. Also, quality products and low prices can’t be equally important objectives, or a company will be stuck in the middle.

What is strategy? We can now complete the answer to this question. Strategy is creating fit among a company’s activities. The success of a strategy depends on doing many things well—not just a few—and integrating among them. If there is no fit among activities, there is no distinctive strategy and little sustainability.

The List: Good Strategy, Bad Strategy by Richard Rumelt Why: Especially because it will show you how to identify bad strategy The Five Dysnfunctions of a Team by Patrick Lencioni Why: Learn most recognised tendencies of dysfunctional teams (in a storified format) Storyworthy by Matthew Dicks Why: Why storytelling matters in everything we do and how to tell a solid story Never Split the Difference by Christopher Voss Why: Learn the fundamentals of having a competitive edge in any discussion Understanding Michael Porter by Joan Magretta Why: The absolute fundamentals of organisational success - big or small Crossing the Chasm by Geoffrey Moore Why: If you are curious about what it takes to continue growing and scaling a technology company throughout its lifecycle 7 Powers by Hamilton Helmer Why: You can read it once every year. You can pick any failed venture/product and do a post-mortem of why it failed through the lens of this book (learning the value of building and sustaining moats) Build by Tony Fadell Why: This book can be a great friend as you navigate every fork/decision in your career Super Thinking by Gabriel Weinberg and Lauren McCann Why: You can pick your pet mental models from this book and apply in any situation in your life; the pet mental models can keep evolving as you evolve

Blue Ocean Strategy,

Which Problem Do I Want? STRATEGY IS ABOUT MAKING CHOICES, TRADE-OFFS. IT’S ABOUT DELIBERATELY CHOOSING TO BE DIFFERENT. —Michael Porter

Ultimately, all differences between companies in cost or price derive from the hundreds of activities required to create, produce, sell, and deliver their products or services, such as calling on customers, assembling final products, and training employees. Cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors. Similarly, differentiation arises from both the choice of activities and how they are performed. Activities, then, are the basic units of competitive advantage. Overall advantage or disadvantage results from all a company’s activities, not only a few.1

I think historically where we [venture capitalists] fail is when we back technology. Where we succeed is when we back new business models.

I want to discuss why a company exists in the first place. In other words, why are we here? I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively that they could not accomplish separately—they make a contribution to society, a phrase which sounds trite but is fundamental . . . You can look around [in the general business world and] see people who are interested in money and nothing else, but the underlying drives come largely from a desire to do something else: to make a product, to give a service—generally to do something which is of value.1

STRATEGY IS ABOUT MAKING CHOICES, TRADE-OFFS. IT’S ABOUT DELIBERATELY CHOOSING TO BE DIFFERENT. —Michael Porter

The essence of strategy is choosing what not to do.

Programs in operational effectiveness produce reassuring progress, although superior profitability may remain elusive. Business publications and consultants flood the market with information about what other companies are doing, reinforcing the best-practice mentality. Caught up in the race for operational effectiveness, many managers simply do not understand the need to have a strategy. Companies

MOST COMPANIES OWE THEIR INITIAL success to a unique strategic position involving clear trade-offs. Activities once were aligned with that position.

The challenge of developing or reestablishing a clear strategy is often primarily an organizational one and depends on leadership. With so many forces at work against making choices and tradeoffs in organizations, a clear intellectual framework to guide strategy is a necessary counterweight. Moreover, strong leaders willing to make choices are essential. In

Southwest’s strategy involves a whole system of activities, not a collection of parts. Its competitive advantage comes from the way its activities fit and reinforce one another. Fit

Fit is important because discrete activities often affect one another. A sophisticated sales force, for example, confers a greater advantage when the company’s product embodies premium technology and its marketing approach emphasizes customer assistance and support.

A production line with high levels of model variety is more valuable when combined with an inventory and order processing system that minimizes the need for stocking finished goods, a sales process equipped to explain and encourage customization, and an advertising theme that stresses the benefits of product variations that meet a customer’s special needs.

Consistency ensures that the competitive advantages of activities cumulate and do not erode or cancel themselves out. It makes the strategy easier to communicate to customers, employees, and shareholders, and improves implementation through single-mindedness in the corporation. Second-order

Ask those responsible for each activity to identify how other activities within the company improve or detract from their performance. Second, are there ways to strengthen how activities and groups of activities reinforce one another? Finally, could changes in one activity eliminate the need to perform others?

It is more useful to think in terms of themes that pervade many activities, such as low cost, a particular notion of customer service, or a particular conception of the value delivered.

One implication is that strategic positions should have a horizon of a decade or more, not of a single planning cycle. Continuity fosters improvements in individual activities and the fit across activities, allowing an organization to build unique capabilities and skills tailored to its strategy. Continuity also reinforces a company’s identity. Conversely,

Competitive forces = the underlying drivers of profitability P.25

Good industry analysis looks rigorously at the structural underpinnings of profitability P.29

One of the essential tasks in industry analysis is to distinguish temporary or cyclical changes from structural changes. P.29

Good industry analysis does not just list pluses and minuses but sees an industry in overall, systemic terms. P.29

Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly from an industry to its customers. P.32

It is the "threat of entry", not whether "entry" actually occurs, that holds down profitability. p.26

Many strategy errors emanate from mistaking the relevant industry, defining it too broadly or too narrowly p.37

Strategy can be viewed as building defenses against the competitive forces or finding a position in the industry where the forces are weakest. P.35

Without an industry leader, practices desirable for the industry as a whole go unenforced. P.32

Strategists should be particularly alert to changes in other industries that may make them attractive substitutes when they were not before p.31

Author Steve Denning has highlighted the weakness of Porter’s assumption that the purpose of strategy is to avoid competition. Denning pointed instead to management guru Peter Drucker’s dictum that the purpose of business is “to create a customer.

The essence of strategy,” Porter often says, “is choosing what not to do.

What was the vision of the founder? What were the products and customers that made the company? Looking backward, one can reexamine the original strategy to see if it is still valid. Can the historical positioning be implemented in a modern way, one consistent with today’s technologies and practices? This

Differences in national economic structures, values, cultures, institutions, and histories contribute profoundly to competitive success. . .While globalization of competition might appear to make the nation less important, instead it seems to make it more so. With fewer impediments to trade to shelter uncompetitive domestic firms and industries, the home nation takes on growing significance because it is the source of the skills and technology that underpin competitive advantage. . .The home base [for successful global competitors] is the nation in which the essential competitive advantages of the enterprise are created and sustained. It is where a firm’s strategy is set and the core product and process technology (broadly defined) are created and maintained. (Porter 1990: 19)