Page 217 - (DK) The Business Book

WORKING WITH A VISION 215

Michael Porter
Born in 1947 in Michigan,
Michael E. Porter was the
son of a US Army officer,
and lived in different places
around the world as a child.
Porter served in the US Army
Reserve following graduation.
He received a BSE with high
honors in aerospace and
mechanical engineering from
Princeton University, in 1969,
an MBA in 1971 from Harvard
Business School, and a PhD
in business economics from
Harvard University in 1973.
The author of 18 books and
more than 125 articles in the
fields of competitiveness and
The hotel industry is characterized operators. Personal pride in their management, Porter’s
by intense competitor rivalry. Some own trucks and the fact that they
hotel chains have introduced loyalty were economically dependent on academic studies encompass
schemes to try to increase customer their vehicles made them less competitiveness in national,
preference and encourage return visits. regional, social, and health-
price-sensitive as purchasers. care arenas. He has served
Paccar therefore decided to invest as an advisor to governments,
products are nearly identical. An in developing an array of features corporations, nonprofit
example of a market with a low with owner-operators in mind, such organizations, and academics
threat of new entrants is the software as luxurious sleeper cabins, leather across the globe.
market for personal computers. seats, noise-insulated cabins, and
Microsoft came to dominate the sleek exterior styling. They offered Key works
market with its Windows 95 thousands of options for owners to
1980 Competitive Strategy
operating system. New entrants put their personal signature on their
1985 Competitive Advantage
found it hard to break in because trucks, by simply inputting them on
1990 The Competitive
programs such as Excel, PowerPoint, computers at network dealers. They
Advantage of Nations
and Word are universally used. also offered roadside assistance
and fuel-efficient, aerodynamic
Choosing a position designs. As a result, Paccar has
Porter used the US heavy-truck been profitable for more than 68
manufacturer Paccar to illustrate years in succession, and delivers
the principles of choosing how to better-than-average returns.
position a company within a given No matter how different
industry structure. In a crowded industries appear on the surface,
market, Paccar wanted to find a Porter’s model offers any company Defending against the
space where competitive forces a way of assessing profitability competitive forces and
were weak, and where it could avoid through analyzing five easily shaping them in a company’s
buyer power and price-based rivalry. calculated, competitive forces. In favor are crucial to strategy.
In the heavy-truck industry, revealing an industry’s underlying Michael Porter
where large fleet buyers dominate, structure, Porter’s model simplifies
it is hard to create a niche based a mass of information, providing
on differentiation. Paccar, based in managers with a clear process for
Washington state, chose to focus making sense of industry data and
on one group of customers: owner- using it to form effective strategy. ■