How to gain competitive advantage and profitability according to michael porter

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How to gain competitive advantage and profitability according to michael porter

Reputation of the firm Brand equity Capabilities refer to the firm's ability to utilize its resources effectively.

An example of a capability is the ability to bring a product to market faster than competitors. Such capabilities are embedded in the routines of the organization, are not easily documented as procedures, and thus are difficult for competitors to replicate.

The firm's resources and capabilities together form its distinctive competencies. These competencies enable innovation, efficiency, quality, and customer responsiveness, all of which can be leveraged to create a cost advantage or a differentiation advantage.

What is the Five Forces Model?

Cost Advantage and Differentiation Advantage Competitive advantage is created by using resources and capabilities to achieve either a lower cost structure or a differentiated product.

A firm positions itself in its industry through its choice of low cost or differentiation. This decision is a central component of the firm's competitive strategy.


Another important decision is how broad or narrow a market segment to target. Porter formed a matrix using cost advantage, differentiation advantage, and a broad or narrow focus to identify a set of generic strategies that the firm can pursue to create and sustain a competitive advantage. Value Creation The firm creates value by performing a series of activities that Porter identified as the value chain.

In addition to the firm's own value-creating activities, the firm operates in a value system of vertical activities including those of upstream suppliers and downstream channel members.

To achieve a competitive advantage, the firm must perform one or more value creating activities in a way that creates more overall value than do competitors do.

What is a Value Chain Analysis?

Superior value is created through lower costs or superior benefits to the consumer differentiation. Powered by Create your own unique website with customizable templates.The site is offline for a while Please visit http;// Porter's Generic Competitive Strategies (ways of competing) A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average.

The fundamental basis of above average profitability in the long run is sustainable competitive advantage.

How to gain competitive advantage and profitability according to michael porter

According to his book, Competitive Strategy: Techniques for Analyzing Industries and Competitors, these forces determine the intensity of competition and hence the profitability and attractiveness of .

Definition: Competitive Strategy.

SOLYP - Competitive Strategies

Competitive Strategy is defined as the long term plan of a particular company in order to gain competitive advantage over its competitors in the industry.

It is aimed at creating defensive position in an industry and generating a superior ROI (Return on Investment). 68) According to Michael Porter's research on the competitive advantage of nations, human, physical, knowledge, capital, and infrastructure resources are all components of a country's: A) factor conditions.

The Porter five forces model (see Appendix 1) as an external analysis tool was established by Michael E. Porter and firstly announced in his book ‚ÄúCompetitive Strategy: Techniques for Analyzing Industries and Competitors‚ÄĚ in

How to gain competitive advantage and profitability according to michael porter
Porter's Generic Strategies