Brief book review: Competitive Strategy – Techniques for Analyzing Industries and Competitors

Opinion: Timeless classic that focuses on fundamentals of competitive strategy, necessary for every business owner and high-level decision maker.

I remember my college professor advising us on reading this book and me thinking: “How can a 30-year-old book teach me about modern-day business, in this fast-moving environment. We’re in 21st century and technology’s progressing faster than ever?” This was more than decade ago and I couldn’t have been more wrong! This book provides essential understanding and tools on how to analyze industries, rivalry among its players and more importantly how to position yourself in it. It’s one of those books that will never get dust on it, because you’ll return to it often. The author’s experience and focuses lies in production industries, nonetheless, concepts can be applied on service industry with equal materiality.

I learned a lot from it, but more importantly, I’ve changed a perspective on how to look at industry signals and understand various moves that (big) companies often do.

Additionally, I’ll share a few grains of wisdom I’ve acquired from this book.

Extended rivalry – competition that includes customers, suppliers, substitutes and potential entrants.

Structural analysis – underlining characteristics of an industry rooted in its economics and technology that shape the arena in which competitive strategy must be set

Scale economy can be present in nearly every function of a business, including manufacturing, purchasing, R&D, marketing, service network, sales force utilization and distribution.

The functional background of top management is one key measure of its orientation and perception of the business and appropriate goals.

The industry with complicated map of strategic groups will tend to be more competitive as a whole, than one with few groups.

The broadest guidance for the formulation of strategy is stated in terms of matching a firm’s strengths and weaknesses particularly its distinctive competences, to the opportunities and risks in its environment.

Book author: Michael E. Porter; Pages: 382