Now nearing its 60th printing in English and translated into nineteen languages, Michael E. Porter's Competitive Strategy has transformed the theory, practice, and teaching of business strategy throughout the world. Electrifying in its simplicity -- like all great breakthroughs -- Porter's analysis of industries captures the complexity of industry competition in five underlying forces. Porter introduces one of the most powerful competitive tools yet developed: his three generic strategies -- lowest cost, differentiation, and focus -- which bring structure to the task of strategic positioning. He shows how competitive advantage can be defined in terms of relative cost and relative prices, thus linking it directly to profitability, and presents a whole new perspective on how profit is created and divided. In the almost two decades since publication, Porter's framework for predicting competitor behavior has transformed the way in which companies look at their rivals and has given rise to the new discipline of competitor assessment.

More than a million managers in both large and small companies, investment analysts, consultants, students, and scholars throughout the world have internalized Porter's ideas and applied them to assess industries, understand competitors,, and choose competitive positions. The ideas in the book address the underlying fundamentals of competition in a way that is independent of the specifics of the ways companies go about competing.

Competitive Strategy has filled a void in management thinking. It provides an enduring foundation and grounding point on which all subsequent work can be built. By bringing a disciplined structure to the question of how firms achieve superior profitability, Porter's rich frameworks and deep insights comprise a sophisticated view of competition unsurpassed in the last quarter-century.

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On the other hand, the rapid advances of knowledge and technology mean that the relevant benchmark is perfection, not the competitor, in defining an ideal best practice. In that world, this book has serious limitations, because the competitive dimension is often less important than the customer and user dimension these days.

Any business arena begins, as Peter Drucker so aptly put it, with the task "to create a customer." That reminder is especially relevant today when they are so many new ways to serve a customer's needs that no one has ever considered before. The strategic point of 'Blown to Bits' for example is that almost every business will see its vertical value chain (moving from resources through to the customer) broken apart into tiny segments each served by specialists. If you did not begin with that perspective in analyzing the impact of electronically-based business practices, you could easily focus on the wrong tasks using this book to create an over-broad strategy focus, rather than concentrating on just a few areas.

I suspect that the applications of Moore's Law and Metcalfe's Law need to be explicitly considered as part of the analysis that Professor Porter is recommending.

A more general weakness in this book is that it assumes that future conditions will be stable enough to draw conclusions about which conditions will be favorable, without giving enough guidance on how to deal with the increasing frequencies and degrees of volatility that we see (in areas like financial markets, commodity prices, the weather, changing customer preferences, and so forth).

Although no book that takes such a narrow focus can help but have weaknesses (like having the podiatrist not notice that you have kidney problems), if you want a good start of how to think about competitors, this is the book for you. Just be sure you keep developing yours strategy with additional dimensions after you finish using this analysis.

If you have read none of Professor Porter's works, this is the one book you should read.

43 of 44 found the following review helpful:

Required reading for the strategistJan 16, 2001
By Michael G
When I started as a strategy consultant, Porter's Competitive Strategy and the classic five forces model within provided me with a first look at the process and mindset of the pure strategist. A weekend spent reading this book gave me the framework to intelligently analyze company strategy. I've made it required reading for all new employees.

If you are a business student (undergrad or MBA) and for some reason you have not read this, read it and assume everyone you interview with has read it. Use its basic principles in a case study interview and you'll pass with flying colors. Anyone in business of any sort should read this book and try applying it to your own business environment. Its pretty amazing how clear your business issues will appear.

Now for the negatives. It is very out of date, so do not use any of his observations on any of the industries mentioned. His case studies towards the end of the book are so irrelevant they are not worth reading, just skimming. Read his justifications carefully, since you may find yourself disagreeing with a significant percentage.

Despite its age, this is still the primer on strategy. Read this, and then read everything else.

19 of 19 found the following review helpful:

Seminal, But AcademicJan 31, 2005
By Walter H. Bock "Wally Bock - Author, Blogger, Consultant and Coach"
When this book was published for the first time over twenty years ago, it changed the way that people thought about strategy in business, and it gave us what has become a common language for discussing strategic situations. That's why you should consider buying the book. Without an understanding of the terminology that Michael Porter developed originally in Competitive Strategy, you won't be able to follow many of the arguments that other people use when they're talking about the subject.

When you get past that, you need to ask yourself your primary reason for reading any book on strategy. If you're looking for a "how-to" book, one with ideas that you can implement reasonably quickly, this is not the book for you. This is written by a professor and the presentation is academic. That doesn't make the insights any less valuable, but often it makes them harder to unearth.

Here's my recommendation. You should be familiar enough with Porter's basic methods and terminology to recognize and understand them in other books, articles, and discussions. If you don't have that knowledge now, buy this book and develop that understanding.

If you already have a basic knowledge of some of Porter's terminology and concepts, then this book will give you an excellent structural underpinning to take to the other books about strategy. But, if you're looking for something that you can dip into quickly to work on your company's strategic plan, find something a little less dense and academic.

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