Education and Career B.S.E. Aerospace and Mechanical

Engineering Princeton 1969 M.B.A Harvard 1971 Ph.D. Business Economics –

Harvard 1973 Bishop William Lawrence

University Professor, based at Harvard Business School

Environmental Forces1980

Decline in demand High interest rates High inflation Deregulation by the

government

Porter’s Five Competitive Forces

1. Threat of Entry2. Threat of Substitution3. Bargaining Power of Buyers4. Bargaining Power of Suppliers5. Rivalry Among Current

Competitors

Threat of Entry

Depends on two things:1. Barriers to entry

Economies of Scale Product Differentiation Capital Requirements Switching Costs Access to Distribution Channels Government Policies

Threat of Entry…

2. Expected Retaliation History of retaliation Established firms Slow industry growth

Pressure from Substitute Products

Create a ceiling on price Identify them by searching for other products that can perform the same function in the market

Requires good analysis

Bargaining Power of Buyers Force prices to go down Play competitors against each other

Bargaining Power of Suppliers Threaten to raise prices Threaten to reduce quality Powerful suppliers can squeeze

profitability out of an industry

Rivalry Among Current Competitors Jockeying for position Pattern of action and reaction Price competition Advertising battles Product Introductions

Create a Defendable Position

1. Positioning2. Influence the

Balance3. Exploit Change

Impact on Management Author of 16 books and 75

articles Competitive Strategy… What is Strategy? Defined our understanding of

competition and competitive strategy

Influence

Recent Works Clusters

Geographic concentrations of interconnected companies

Compete but also cooperate Silicon Valley Hollywood

Role of location in competitive advantage

More Recent Works…

Innovation Index Innovative activity vital to a nation’s growth

Innovation Index-measure a nation’s innovation

Criticisms

Innovation Methodology is based on patents filed in US

Not all innovations relate to patents

Judge a whole nation’s innovation Parts may be better or worse

Not afraid to take a point of view and to present it before he has fully developed his argument The Prophet Unfounded claims

Internet StrategyRemained silent until now

Created retrospective summations

Strategy and the Internet More important than ever to use

strategy Internet tends to weaken industry

profitability Shift basis of competition away from

differentiation, and toward price Rushing into misguided partnerships

See the Internet for what it is Enabling Technology Set of Tools Can be used wisely or unwisely

As part of a strategy

In the end, companies can’t just jump without thinking into an internet strategy.

They still must create value – and get paid for it.