Understanding Michael Porter The Essential Guide to Competition and Strategy
The main take away that I have from chapter one of this book is that strategic competition means choosing a path that is different from the others. Instead of trying to be the best, companies should be competing to be unique. Uniqueness in the value you create for your business can give you a competitive edge. According to Michael Porter, the right mindset for the competition is to earn higher returns, profits, meet the diverse needs of your customers and compete by innovation.
Porter’s five forces:
- Rivalry among existing competitors
- The threat of new entrants
- Bargaining power of buyers
- The threat of substitute products or services
- Bargaining power of suppliers
These five forces tell you immediately how the industry works and how it creates and shares values. It explains the industry’s profitability. I find this true in my research of the hemp industry. As I work on my situational analysis, I find that Porter’s five forces will help me realize the profit potential in this industry. As we all know, profit is important.
Magretta, J. (2012). Understanding Michael Porter: the essential guide to competition and strategy. Boston, Mass: Harvard Business Review Press.