Book Review Week 2

Understanding Michael Porter The Essential Guide to Competition and Strategy

This week’s reading was about competitive advantage and profit and loss.   I have always viewed competitive advantage as being what you or your company did better than everyone else that set you apart.  According to the book, it is about creating superior value. It’s about operating at a lower cost or demanding a higher price to demand the most profit.  

When trying to determine or measure competitive advantage you must compare it to like companies within the same industry.  Compare companies that face the same five forces in the same industry. To truly understand the competitive advantage you must understand the activities that your company performs.  These activities include producing, designing, selling and delivering. These are all part of the value chain. The value chain is how you create value in your product from start to customer or consumer.  You look at each step in the value chain as adding value to the final product. The way your company looks at these steps is what can set you apart from your competitors. You may be able to perform a step the same as the competitor at a cheaper price or do the step better at the same price.  Porter refers to performing a task better than your rivals operational effectiveness. 

The company’s value chain is all of its value-creating and cost-generating activities.  These activities are the basic units of competitive advantage. As we look at our own business, it is important to examine all the activities and possibly do them differently than our rivals, do them cheaper than our rivals, demand a higher price than our rivals, and be unique. 

Magretta, J. (2012). Understanding Michael Porter: the essential guide to competition and strategy. Boston, Mass: Harvard Business Review Press.

3 thoughts on “Book Review Week 2

  1. Tina,
    As with our other readings from prior classes, this book so far has been an excellent read! I agree with the statement you said in regards to competition as something that a company does better than another company. However, this reading by Magretta provided a whole new insight with providing a better understanding as to what competition truly means. Superior value according to Magretta, is one of the most important steps to becoming successful in the business world. As entrepreneurs, we must know how to properly distinguish our product/service to allow for more customers based on factors such as the quality of the product/service as well as the price of the product/service. Learning how to outshine our competitors by providing what our customers want will improve superior value within a company. Excellent post, I enjoyed reading your thoughts and interpretation on our assigned reading material.


    1. Audrey,
      So far, I have enjoyed reading this book and using it as a guide to some of our assignments. I have been reading about creating value this week and find that this is necessary in having a competitive advantage.


      1. Tina,
        The book has been an excellent read and provided a lot of insight with ways to apply those concepts to assignments in the course and everyday life. Thanks for the feedback!


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