Understanding Michael Porter

CHAPTER 3

Competitive: Advantage

The Value Chain and Your P&L

NO TERM IS MORE closely associated with Porter than competitive advantage. You hear it in companies all the time, but rarely as Porter intended. Used loosely, as it most often is, it has come to mean little more than anything an organization thinks it is good at. Implicitly, it is the weapon managers count on to prevail against their rivals.

This misses the mark in important ways. For Porter, competitive advantage is not about trouncing rivals, it’s about creating superior value. Moreover, the term is both concrete and specific. If you have a real competitive advantage, it means that ...