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 Forces 1980 Decline in demand High interest rates High inflation Deregulation by the government

Porter’s Five Competitive Forces 1. Threat of Entry 2. Threat of Substitution 3. Bargaining Power of Buyers 4. Bargaining Power of Suppliers 5. 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. Positioning 2. Influence the Balance 3. 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 Strategy Remained 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.