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Industrial structure takes a long time to change and remains fairly stable. Continuity reinforces a companies identity, it builds a companies brand, its reputation and customer relationships. In this book, the author distills Porter's core concepts and frameworks into a … Serve ‘best’ customer with ‘best’ product. This has led to success of price comparison sites to facilitate this new reality. Companies need breathing room to hone their activities and develop competitive advantage over time. Understanding Michael Porter sets the record straight, providing the first concise, accessible summary of Porter’s revolutionary thinking. If you’re pursuing a different positioning, then different metrics will be relevant. Industry structure determines profitability much more than growth (industry) tech etc.. They’re each playing their own sport. Strategy is all about making priorities clearer. "Understanding Michael Porter" sets the record straight, providing the first concise, accessible summary of Porter's revolutionary thinking. Written … Relative price: Sustainable premium price = unique + valuable to customer. Industry structure is an exponentially more powerful and objective tool for understanding the dynamics of competition. Here's a preview of the rest of Shortform's Understanding Michael Porter summary: Business is often compared to sports or war because of dramatic appeal. If you’re servicing the same customers, with the same needs, at the same price, you don’t have a strategy. If you have a real competitive advantage, compared with rivals, you operate at a lower cost, command a premium price, or both. A best hamburger? Continuity helps supplies, channels and other outside parties to contribute. Competition to be the best ultimately leads to destructive, zero sum competition.”. It looks at relative prices and relative costs and their sustainability. Since its publication in 1979, it has become one of the most popular and highly regarded business strategy tools.Porter recognized that organizations likely keep a close watch on their rivals, but he encouraged them to look beyond the actions of their competitors and examine what other factors could impact the business environment. Compare your value proposition to your rivals. Therefore, you should compete to be unique. Contact the customer directly instead of through a distributor. Understanding Michael Porter. When trying to find an answer, it’s tempting to focus on the competition between rivals. Six-Force Model: A design used to show how companies or industries are affected by external factors. When you try to offer something for everyone, you tend to the relax the trade-offs that underpin your competitive advantage. So, the business model is best used as the most basic step in thinking about the viability of the company. Understanding Michael Porter Book Summary distils Michael Porters’ main ideas and explains them in easy to understand terminology. If you have a real competitive advantage, your ROIC will be sustainably higher than the industry average. The Five Forces analysis suggests the profitability of an industry, but it does not automatically suggest how you should operate in the industry to maximize profits. Read on the go with our iOS and Android App. Understanding Michael Porter sets the record straight, providing the first concise, accessible summary of Porter’s revolutionary thinking. The Five Forces that matter in any industry are: The more powerful the force, the more pressure it will put on decreasing prices or increasing costs, or both. UNDERSTANDING MICHAEL PORTER. And if possible try to make choices that are incompatible with competitors value chains. Take one path, you can then create a value chain helps you identify these leverage points an... 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