Competitive Strategy

Reviewed by: 
Michael E. Porter
Simon & Schuster Inc
Alistair Schofield, Managing Director, Extensor Limited

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Michael Porter is Professor at the Institute of Strategy and Competitiveness at Harvard Business School and a recognised authority on competition and competitive strategy.  His book Competitive Strategy was first published in 1980 and quickly became required reading on many business studies and MBA programmes around the world.

The book was clearly written to be a text book as it provides a very structured and somewhat clinical description of the subject, rather than the more narrative approach preferred by authors targeting a broader audience.  Nevertheless, it is an important work that does have a place on the bookshelves of practitioners as well as academics.

The book states that its objective is; “to provide a comprehensive framework of analytical techniques to help organisations analyse their industry as a whole and to predict their own future evolution, understand their competitors and to translate this analysis into a competitive strategy for their business.”

The book is organised in three parts.  In Part 1, the book presents a comprehensive framework for analysing the structure of an industry and its competition.

In Part 2, Porter shows how the analysis from Part 1 can be used to develop a competitive strategy.  In this section he places a great deal of emphasis on how that strategy should be adapted to suit the circumstances of a particular industry.  A strength of the book is therefore its recognitions that there are no “one-size-fits-all” routes to success and that successful strategies are based on the thorough analysis of a large number of variables.

In the final part of the book Porter considers some of the major strategic decisions organisations are likely to face, such as whether to increase capacity, enter new markets or vertically integrate.  Given the somewhat generic nature of the rest of the book, this section may at first sight see rather specific.  However, the point I believe Porter is making is that change is inevitable and the strategies he describes are ones that organisations will inevitably have to consider at some point in their development as markets mature and as they attempt to react to or our-manoeuvre their competitors.

Although widely regarded as a seminal work, the book has been frequently criticised for being too static in its analysis, implying that markets do not change, a criticism Porter dismisses as a misunderstanding.  While I accept Porter’s point, it is easy to see how a book that is so detailed in its analysis can be viewed as ignoring the dynamics of an increasing pace of change; after all, not many companies will have either the time or resource to conduct the sort of in-depth analysis that Porter advocates before making important decisions in today’s markets.  However, this does not make the analysis any less worthwhile, it simply emphasises the need for business leaders to be constantly in touch and well informed.
Finally to the difficult question – would I recommend the book?

I would certainly recommend it to anyone who is working on writing a strategic plan as it provides a useful check-list of the subjects to cover.  But for someone with a more general interest in marketing or business strategy, I would recommend “Dealing With Darwin” by Geoffery Moore in preference to this book, as Moor provides an eminently more readable description of the dynamics of strategic planning - Porter provides more of a check-list.

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