Competitive Advantage: Enduring Ideas and New …

Competitive Advantage:

Enduring Ideas and New Opportunities

Professor Michael E. Porter

Harvard Business School

14th Annual Rotman School

Conference for Leaders

Toronto, Canada

June 22, 2012

This presentation draws on ideas from Professor Porter¡¯s books and articles, in particular, Competitive Strategy (The Free Press, 1980); Competitive

Advantage (The Free Press, 1985); ¡°What is Strategy?¡± (Harvard Business Review, Nov/Dec 1996); and On Competition (Harvard Business Review,

2008). No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means¡ªelectronic, mechanical,

photocopying, recording, or otherwise¡ªwithout the permission of Michael E. Porter. Additional information may be found at the website of the Institute for

Strategy and Competitiveness, isc.hbs.edu.

Thinking Strategically

COMPETING

TO BE THE BEST

COMPETING

TO BE UNIQUE

The worst error in strategy is to compete

with rivals on the same dimensions

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Copyright 2012 ? Professor Michael E. Porter

Defining a Strategy

? Strategy is different than aspirations

¨C ¡°Our strategy is to be #1 or #2¡­¡±

¨C ¡°Our strategy is to be the world leader¡­¡±

¨C ¡°Our strategy is to grow¡­¡±

¨C ¡°Our strategy is to provide superior returns to our shareholders¡­¡±

? Strategy is more than a particular action

¨C ¡°Our strategy is to merge¡­¡±

¨C ¡°¡­ internationalize¡­¡±

¨C ¡°¡­ consolidate the industry¡­¡±

¨C ¡°¡­ outsource¡­¡±

¨C ¡°¡­double our R&D budget¡­¡±

? Strategy is not the same as vision / values

¨C ¡°Our strategy is to advance technology for mankind ¡­¡±

¨C ¡°¡­to be customer centric¡­¡±

? Strategy defines the company¡¯s distinctive approach to competing

and the competitive advantages on which it will be based

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Copyright 2012 ? Professor Michael E. Porter

Economic Foundations of Competition

? Company economic performance results from two distinct causes

Strategic

Positioning

Within the

Industry

Industry

Structure

- Industry Attractiveness

- Sustainable Competitive Advantage

? Strategic thinking must encompass both areas

? Companies must focus on the health of the industry,

not just their own position

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Copyright 2012 ? Professor Michael E. Porter

Strategic Positioning

Achieving Superior Performance

Differentiation

(Higher Price)

Competitive

Advantage

Lower Cost

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Copyright 2012 ? Professor Michael E. Porter

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