Competitive Advantage: Creating and Sustaining Superior Performance
November 23rd, 2006
 | Author(s): Michael E. Porter Publisher: Free Press Year/edition: 1998 (1st Free Press Edition) ISBN: 0684841460 Language: English File size: 27.9 MB |
The book “Competitive Advantage” describes how a firm can gain an advantage over its rivals. Michael Porter introduced the concept of the “value chain” that breaks down a company into “activities” or the discrete functions or processes that represent the elemental building blocks of competitive advantage. Such discrete activities include order processing, producing products or services, training people, advertising or transporting goods. The value chain concept allows firms to isolate the underlying source of buyer value that will enable a firm to charge a premium price and explains the reasons why one product or service substitutes for another.
Competitive advantage is the key to a company’s performance in competitive markets. This is very important in today’s global markets when firms face global competition. The book explains how a firm can create and sustain a competitive advantage. It discusses the need for firms to effectively translate their broad competitive strategies into specific action steps required to gain competitive advantage. In particular, the book bridges the gap that many firms have between strategy formulation and implementation and treats the two subjects together.
Porter describes how a firm can put the three generic competitive strategies of cost leadership, differentiation and focus into practice. It highlights, for example, how a firm can differentiate itself from its rivals or how a firm can gain a cost advantage.
The book highlights the need for all the functions of an organization to play their role in creating competitive advantage. Production, marketing, finance, human resources and others all play essential roles for a firm in a combined and integrated way.
The book is critical reading for managers who play a part in a firm’s strategy (that means all managers). Students studying strategic management will find the book very informative and easy to follow.
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