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Sunday, June 19, 2011

Best Business Books #6--Competitive Strategy

Competitive Strategy by Michael Porter (Free Press, 1998) is considered a modern classic and a bible for corporate strategists. Porter, considered the father of modern corporate strategy, contends that there are three generic strategies ( a company must adopt one to compete): Differentiation (value added that people pay a premium price for); Cost-based Leadership that involves offering products and services at the lowest cost; and Focus—or a combination of the first two and market targeting. Finally, Porter offers five competitive forces (to sustain their competitive edge) which are embedded in the following: 1) Entry of new competitors; 2) the threat of new substitutes; 3) the bargaining power of buyers; 4) the bargaining power of suppliers; and 5) the rivalry among existing competitors.

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