Michael Porter : What is Strategy?(competitive strategy analysis)

In an age when management gurus are both lauded by the faithful and hounded by the critics, Michael Porter seems to be one of the few who is well-accepted both academically and in the business world. Though he has his critics, Porter has generally been viewed as at the leading edge of strategic thinking since his first major publication, Competitive Strategy (1980), which became a corporate bible for many in the early 1980s.

Life and career

Born in 1947, Porter completed a degree in aeronautical engineering at Princeton and took an economics doctorate at Harvard, joining the faculty there as a tenured professor at the age of 26. He has acted as consultant to companies and to governments and, like many academics, he set up a consulting company - Monitor.

Porter's Thinking

Porter's thinking on strategy has been supported by precision research into industries and companies, and has remained consistent as well as developmental. He has concentrated on different aspects at different times, spinning the threads together with a logic that is irrefutable.

Before Competitive Strategy, most strategic thinking focused either on the organisation of a company's internal resources and their adaptation to meet particular circumstances in the marketplace, or on increasing an organisation's competitiveness by lowering prices to increase market share. These approaches, derived from the work of Igor Ansoff, were bundled into systems or processes which provided strategy with its place in the organisation.

In Competitive Strategy, Porter managed to reconcile these approaches, providing management with a fresh way of looking at strategy - from the point of view of industry itself rather than just from the point of view of markets, or of organisational capabilities.

Internal capability for competitiveness - The Value Chain

Porter describes two different types of business activity - primary and secondary. Primary activities are principally concerned with transforming inputs (raw materials) into outputs (products), and …