St. Petersburg photographer Alexander Petrosyan works in the genre of reportage, explaining...
Who is M. Porter and why is he interested in the heads of large corporations?
Michael Eugene Porter is an economist who has done a lot in the field of competition studies and holds a professorial degree. Today he teaches at the university department at Harvard. The future scientist was born on May 23, 1947 in the USA. His father was a military officer.
Biographical fragments
From early childhood, Michael showed extraordinary aptitude for science and was an excellent student. He successfully graduated from the most prestigious American university - Princeton. Later he studied at Harvard, at graduation he delighted all his loved ones - he received a diploma with honors, and here he became a master in problems market economy and Ph.D. When Michael turned twenty-six he began writing scientific work to study many industries in different countries of the world. He was the only young scientist in this field with the title of professor.
M. Porter was repeatedly awarded by his native state for his contribution to science:
Three fellowships from McKinsey & Company;
Once awarded with a special award from the Academy of Management George R. Terry Book;
Adam Smith Award.
He is an outstanding scientist of his time, he has seven honorary doctorates.
Porter's scientific activities
Michael Porter is one of the leading experts of our time in the field of studying competition as a science. During his professional career, he has repeatedly provided business consulting to global companies: Procter & Gamble, AT&T, Royal Dutch Shell, DuPont. He provided services as an economist and financier to large corporations: Alpha-Beta Technologies, ThermoQuest Corp, Parametric Technolodgy Corp, R&B Falcon Corp. He advised the American government on economic issues and, during the Reagan administration, served on the President's Commission on the competitiveness of American industries. Many world figures - Indian, New Zealand, Canadian, Portuguese, South Korean scientists - turned to him for help. Now the famous economist is working with representatives of Central America.
In the field of economics, Michael Porter was involved, among other things, in the study of Russia. In 2005 he conducted a study of our country in order to identify the degree of its competitiveness in world markets. After conducting an analysis, the specialist came to the conclusion that there are two problems for the economy in the Russian Federation:
1. The first is the raw material orientation: too one-sided.
2. The second is the presence of many vertically integrated companies.
They prevent Russia from achieving high rates of economic growth that would be sustainable in the future.
Porter rejected the impact of national security on key corporations. In his opinion, this focus has become obsolete along with General Motors. The economy has long been driven by small mobile companies.
Some American cities were literally “revitalized” more than once by those created for them. economic theories Porter. Through his initiative and labors, a social movement was created that worked out ways promising development“declining” (in economic terms) urban areas, dragging their cities to the bottom.
M. Porter's work on competition
Carrying out numerous studies, the scientist created the concept competitive forces, in which he identified several fundamental directions.
The main thing is that the competitiveness of any organization always depends on the competitive capabilities of those companies that surround it and their ability to compete. There is definitely a direct connection with raw materials.
M. Porter owns a work on the analysis of competition between companies, in which he notes several stages of growth of competition in the national economy (from initial to final). Here are the factors influencing inter-industry competition:
New players on the market;
Buyers' influence on pricing;
Dependence of suppliers on pricing;
The appearance of analogues for this product;
The degree of competition between organizations within an industry.
The scientist says that the success of organizations in international markets depends on the strength of competition within the market and the degree of customer requirements. And if there is weak competition on domestic market, then we must expect a loss of competitive advantages.
Analysis of competitive forces is very important at all stages of business operation. In this article I want to introduce readers to another method of analyzing competitors and competitive environment. This method is named after its author, Michael Porter, a professor at Harvard Business School. Michael Porter is one of the world's leading experts on economic competition, both domestic and international. international markets.
Introduction. Porter's analysis of competitive forces.
Porter presented his analysis of competitive forces in 1979, and at the same time this method was called "Porter's Five Forces Method". During my professional activity Michael Porter systematized competition models and developed rules and methods for conducting competition in the market.
Of course, first of all, Porter's five forces method is an analysis tool for big business. But he can and should use Porter’s methods for his analyzes and further actions.
“For a company to generate stable, growing revenue, it must achieve leadership in one of three areas: product, price, or niche market,” Porter wrote. And it’s hard to disagree with this. And small business is also inseparable from these conclusions.
Michael Porter's Five Competitive Forces Model.
In his theory of competition, Michael Porter described ways to build competitive advantage and long-term product profitability, as well as an analysis of competitive forces and ways in which profitability can be sustained over a long period of time.
The essence of Porter's theory is presented in the figure. Porter's theory of competition states that there are five forces in the market that determine the comfort of a business in the market and its possible level.
Each force in Michael Porter's model represents a certain threat to business and has a significant impact on the level of competitiveness of both the business as a whole and individual products.
Michael Porter believes that it is the influence of suppliers, consumers, new players, the emergence of substitute products and competitors that are the main sources of competition. This is what formed the name of the model – “ Porter's Five Forces of Competition model.
Porter's model allows us to draw several fundamental conclusions.
1) As activity in a market niche increases, that market niche becomes less profitable.
2) Accordingly, the weaker the influence of competitive forces, the more profitable and attractive the market niche.
3) The most influential competitive forces have the greatest impact on business profits.
Let's look at the impact each force has on the market and business.
Strength #1. The threat of invasion by new players.
What dangers do new players bring to the market? First of all, new players create crowded conditions in the market and try to take away customers from existing players. In addition, new players are adding new ones to the market production capacity, new resources, perhaps higher levels, perhaps more low prices for products. All this can cause changes in the market, change consumer preferences, and reduce the profits of existing players. The number of new players and their impact on a market niche depends on the level of entry barriers of this niche.
Porter identified six main factors that influence the height of barriers to a market niche and make it difficult for new players to enter it.
1) Investment level to start a business . The higher the initial level for entering the market, the more difficult it is for new players to enter it, the less attractive it is for new players.
2) Variety of products on the market. The greater the variety of goods and services in a market niche, the more difficult it is for new players to enter the market.
3) The strength of existing brands in the market . The more popular and more famous brands existing market players, the more difficult it is for a newcomer to enter it.
4) Production volume of existing players. The larger the production volume of a business, the lower the cost of producing a unit of output, the more difficult it is for a new player to achieve high and profitable returns when entering the market.
5) Government regulation. The higher the restrictions imposed by the state on business, the greater the influence of the state on business, the lower the attractiveness of the niche for new players.
6) High fixed costs in a market niche . The higher the level fixed costs in a market niche, in a region, the more difficult it is for new players to make a profit, the more difficult it is for them to enter the market.
7) Access to consumption channels. The more difficult it is to highlight target audience in the market, the more difficult it is to reach the target consumer, the lower the attractiveness of the market niche.
There are also quite a few threats to entry into the market niche for new players. This includes the willingness and ability of existing players to manipulate prices to maintain market share. This includes the availability of reserve sources of financing and additional production capacity for existing players. This includes consumer commitment to a particular brand. Well, one cannot discount the general slowdown in market growth rates, or recessions and crises in the market.
Power #2. Bargaining power of buyers.
The buyer ensures the existence of the market by satisfying his needs. Without buyers, the market does not exist. Therefore, the buyer is the most important market participant. And, therefore, has a significant impact on the market.
What dangers do consumers bring to the market? Consumers can tighten competition by placing higher demands on product quality and service levels, and put constant pressure on price levels. I will give the main factors when buyers become a threat to a business and significantly affect its profits.
1) Dissatisfaction with product quality. Dissatisfaction with quality creates a need for quality products that can be satisfied by competitors or new market players.
2) Concentration of business sales to a limited number of consumers. If buyers are concentrated in a limited number of specific groups and these groups make purchases on a large scale, the business must constantly make concessions to these buyers to ensure revenue. But his profit will decrease with these concessions.
3) Business products are not unique . The products sold on the market are not unique and are no different from the products of competitors. The buyer can freely change the seller without making a specific choice. The buyer's choice will be random.
4) Increased sensitivity of target consumers to product price . The higher the sensitivity of target consumers to , the higher the likelihood of purchasing a product at a lower price from competitors, despite the lower quality of their products. The consumer provokes a price war, which does not end well.
As we see, more high requirements demanded by consumers force manufacturers to improve quality and reduce prices of their products. And this inevitably entails an increase in costs and, consequently, a reduction in profits.
Power #3. The emergence of substitute products.
For the consumer, substitute goods limit price increases in the market. Well, this is a very big threat for businesses. And if market players are unable to differentiate their products from substitute products, the market niche will experience low profits and even the departure of many players from the market. A very typical example is the massive release of inexpensive products from China to the markets.
What types of substitute products pose the greatest threat to the market?
1) Substitute products that can provide a better price-quality ratio (look). Products with the best price-quality ratio almost always capture a large group of consumers in the market.
2) Substitute products that do not have high quality, but having a clear advantage in price . Simply put, counterfeit products of the main market players.
3) Fundamentally new substitute products. Substitute products that allow the consumer to satisfy the same needs as existing products on the market, but with other, cheaper or higher quality methods.
4) Substitute products produced by major players in other markets. Substitute products produced by large players who have high profits in other markets and are able to existing market less profitable business.
It is quite natural that the higher the share of substitute goods on the market, the lower the profit and competitiveness of businesses operating on the market.
Strength #4. Bargaining power of suppliers.
Suppliers influence the competitiveness of market players because are the owners of resources for production. I will give the main factors when suppliers become a threat to a business and significantly affect its profits.
1) Few suppliers on the market . The fewer suppliers, the more likely it is that there will be an unreasonable increase in prices for supplied raw materials. The most unfavorable factor is the monopoly of raw material suppliers and its dictate of prices and conditions.
2) Limited volume of products produced by suppliers. Or the limited volume of quality products they produce. This volume does not meet the market demand for high-quality raw materials and allows suppliers to dictate their terms.
3) Low interest of raw material producers in the market segment. Market Niche is not a priority for suppliers and the implementation of their resources in it does not ensure high income for the supplier.
4) High costs when switching to new suppliers. Switching costs to new suppliers are high due to the uniqueness of the raw materials or due to the significant distance of the new suppliers.
The market power of suppliers results in higher prices for raw materials. And if market players cannot raise their prices by finished products, profit from the sale of goods and services decreases.
Strength #5. Competition in the market.
Competition in the market is beneficial to the consumer. And businesses lead to lower product prices, increased costs for product promotion, improved product quality, and increased investment in new developments. All this reduces the profitability of businesses.
Competition is growing and becoming a threat to businesses due to a number of factors.
1) Crowded market or market niche. On the market a large number of players and their number is constantly growing. Moreover, there are no clear market leaders. The more players there are in the market, the higher the level of competition and the risk of losing market share.
2) Low market growth rate or market decline. Leads to a constant redistribution of the market, the seizure of market share from each other.
3) Availability of a large number of similar products on the market . Low differentiation of products in the market creates many purchasing options for the consumer, leads to constant switching of the consumer from one business to another, and leads to instability of income and profit of businesses.
4) High costs of reorienting businesses . If the costs of reorienting businesses in a given market segment are high, players do not leave this segment, continue to exist even with low profitability, create an excess of products on the market, and increase competition.
Conclusion.
The article turned out to be quite long. But even in it I did not convey all the information on Porter’s analysis of competitive forces. Porter's analysis of competitive forces is good precisely because of its practical component. But I believe that acquaintance with his theory is very useful, and without this acquaintance it is impossible to move on to practical application analysis of five competitive forces. Therefore, I will talk about how to practically use his analysis of competitive forces in the next article. So, if you are interested in this topic, keep an eye on the latest news on the site.
And I also want to say about my observations. It seems that all of Porter's conclusions are very simple, logical and well-known. But this only emphasizes the relevance of his theory - a very simple and logical analysis of competitive forces.
Porter, Michael
Best known as the popularizer of the concept of an economic cluster, he showed that the competitiveness of a company is largely determined by the competitiveness of its economic environment, which, in turn, depends on the basic conditions (common resource) and competition within the cluster.
According to M. Porter, the stronger the competition in the domestic market of a country and the higher the demands of buyers, the greater the likelihood of success of companies from this country in international markets (and vice versa, weakening competition in the national market usually leads to the loss of competitive advantages).
Fundamental book by M. Porter The Competitive Advantage of Nations published in Russian under the title “International Competition”.
Michael Porter is one of the leading experts in the study of the nature of competition. During his career, Porter acted as a business consultant to world-famous companies, including, for example, AT&T, DuPont, Royal Dutch / Shell and Procter & Gamble, and provided services to the boards of directors of Alpha-Beta Technologies , Parametric Technology Corp., R&B Falcon Corp. and ThermoQuest Corp. Porter also worked as a government consultant. He was appointed to the President's Commission on Industrial Competitiveness by President Reagan and was also tapped by Massachusetts Governor William F. Weld to chair the Governor's Council on Economic Growth and Technology. M. Porter has advised the governments of countries such as India, New Zealand, Canada and Portugal, and is currently a leading specialist in the development of regional strategy for the presidents of Central America. Professor Porter has been an innovator in revitalizing the economy of America's old inner cities. M. Porter is the founder and chairman non-profit organization The Initiative for a Competitive Inner City (USA), which seeks ways to accelerate business-led development and growth in the old inner city and proposes a new approach to economic development.
Professional awards, awards: Received the McKinsey award three times for his articles. George R. Terry Book Award (Academy of Management) for "competitive advantage as an outstanding contribution to management development." Adam Smith Award ( National Association industrial economists). Seven honorary doctorates.
Literature
- Michael Porter Competition = Michael E. Porter on Competition. - M.: “Williams”, 2006. - P. 608. - ISBN 5-8459-0794-2
Links
External links and notes
Wikimedia Foundation.
2010.
See what “Porter, Michael” is in other dictionaries: Michael Porter (eng. Michael E. Porter; born in 1947) professor of the department business administration Harvard Business School Business School
), a recognized expert in the field of studying economic competition, including competition... Wikipedia
Michael Porter Michael Porter Date of birth: 1947 (1947) ... Wikipedia
- (English Michael E. Porter; born in 1947) Professor of the Department of Business Administration at Harvard Business School, a recognized expert in the field of studying economic competition, including competition in ... ... Wikipedia
Michael Redd Position: Shooting guard Height: 198 cm Weight: 97 k ... Wikipedia
George Porter English George Porter ... Wikipedia
The drink Porter is a type of beer. Surname Famous bearers: George Porter (English George Porter; 1920 2002) English physical chemist, member of the Royal Society of London (1960). Porter, David Dixon (eng. David Dixon Porter; 1813 1891) ... ... Wikipedia
Michael Francis Atiyah English sir Michael Francis Atiyah ... Wikipedia
Michael Vincent Hayden Michael Vincent Hayden ... Wikipedia
Books
- International competition. Competitive Advantages of Nations, Michael E. Porter. How do nations achieve prosperity and well-being in a global economy? To find out, Michael Porter conducted basic research. Over the course of four years, he studied ten...
Including competition in international markets, competition between countries and regions. Developed a theory of countries' competitive advantages.
Encyclopedic YouTube
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✪ "Competitive advantage". Michael Porter
✪ Lecture 8: Blue Ocean Strategy
Subtitles
Biography
Professor Porter has been an innovator in revitalizing the economy of America's old inner cities. M. Porter is the founder and chairman of the nonprofit organization Competitive Inner City Initiative. Initiative for a Competitive Inner City) (USA), which is looking for ways to accelerate the development and growth of the old inner city, based on business, and proposes a new approach to its economic development.
Scientific views
Porter, as a popularizer of the concept of an economic cluster, showed that the competitiveness of a company is largely determined by the competitiveness of its economic environment, which, in turn, depends on the basic conditions (common resource) and competition within the cluster.
Porter developed a well-known methodology for analyzing competitiveness, and also described the stages of growth of competitiveness national economy(from the stage of "primary factors" such as cheap labor, to the stage of competition based on innovation and the last stage - competition based on wealth).
According to Michael Porter, the stronger the competition in the domestic market of a country and the higher the demands of customers, the greater the likelihood of success of companies from this country in international markets (and vice versa, weakening competition in the national market usually leads to a loss of competitive advantages).
Porter's fundamental book The Competitive Advantage of Nations was published in Russian under the title “International Competition”.
Bibliography
Monographs
- Interbrand Choice, Strategy, and Bilateral Market Power (Harvard Economic Studies). - Cambridge, Mass.: Harvard University Press, 1976. - 254 p. - ISBN 0-674-45820-6.
- Competitive Strategy: Techniques for Analyzing Industries and Competitors. - New York: The Free Press, 1980 (2nd ed. - New York: Free Press, 1998. - 397 p. - ISBN 978-0-684-84148-9);
- Competitive Advantage: Creating and Sustaining Superior Performance. - New York: The Free Press, 1985 (2nd ed. - New York: Free Press, 1998. - 592 p. - ISBN 978-0-684-84146-5);
- Competitive Advantage of Nations. - New York: Free Press, 1990 (2nd. ed. - New York: Free Press, 1998. - 896 p. - Japanese economic model. Can Japan compete? - M.: Alpina Publisher, 2005. - 262 p. . - ISBN 5-9614-0130-8.
- Porter M. E., Elizabeth Olmsted Teisberg E. O. Redefining Health Care: Creating Value-Based Competition on Results. - Boston: Harvard Business School Press, 2006. - 506 p. - ISBN 1-59139-778-2.
Collections
- Porter, M. E.(ed.) Competition in Global Industries. Boston: Harvard Business School Press, 1986.
Featured Articles
- Porter M. E. How Competitive Forces Shape Strategy // Harvard Business Review, March/April 1979.
- Porter M. E. From Competitive Advantage to Corporate Strategy // Harvard Business Review , May/June 1987, pp. 43-59.
- Porter M. E. Towards a Dynamic Theory of Strategy // Strategic Management Journal, 1991, 12 (Winter Special Issue), pp. 95-117.
- Porter M. E. What is Strategy // Harvard Business Review, Nov/Dec 1996.
- McGahan A. M., Porter M. E. How Much Does Industry Matter, Really? // Strategic Management Journal, 1997, 18 (Summer Special Issue), pp. 15-30.
- Porter M. E. Strategy and the Internet // Harvard Business Review, March 2001, pp. 62-78.
- Porter M. E., Kramer M. R. Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility // Harvard Business Review, December 2006, pp. 78-92.
Porter, Michael (1947) Porter, Michael E.
1. Introduction
2. Biographical information
3. Main contribution
4. Evaluation
5. Conclusion
Brief biographical information
Born May 23, 1947, Ann Arbor, Michigan;
in 1969-1977 was a U.S. Army reservist; received the rank of captain;
received his degree in 1969B.S.E.from Princeton University and then an MBA (1971) and PhD (1973) from Harvard University;
in 1973 he was hired by Harvard University and was promoted to professor in 1981;
in 1983-1985 Member of the Presidential Commission on Competition in Industry.
Main works
Interbrand Choice, Strategy and Bilateral Market Power
(1976)
Competitive Strategy: Techniques for Analyzing Industries and Competitors
(1980)
Competitive Advantage: Creating and Sustaining Superior Performance
(1985)
(1986)
The Competitive Advantage of Nations
(1990)
Summary
Basic Michael Porter's scientific goals
was to link enterprise strategy with applied microeconomics, two areas previously considered independently of each other, and to create models and methods for conducting research. His second major book,CompetitiveStrategy(“Competitive Strategy”), revolutionized approaches to enterprise strategies; M. Porter's third book,Competitive Advantage(“Competitive Advantage”), reflected his shift from analyzing competition to creating lasting competitive advantages. Later, M. Porter concentrated his efforts on the global application of his strategic principles, including his ideas about the nature of global competition and the national determinants of competing power.
1. Introduction
As one of the most influential experts on strategy issuesMichael Porterlargely determined the main direction of development of theories of strategy and competition (primarily in a global context). His books on competitive strategies and competitive advantage are read and discussed around the world; You are unlikely to meet (at least in the West) holders of a Master of Business Administration degree who do not know by heart his two most famous models - the “five forces” and the value chain. Based on these basic models, M. Porter performed a simple but extremely useful analysis of the determinants of competition and the global forces influencing it, as well as the ways and means of ensuring the long-term competitiveness of an enterprise.
2. Biographical information
Michael Porterborn in 1947 in Michigan in the family of an army officer. He managed to make an amazing scientific career. After graduating from Princeton University, M. Porter received an MBA and PhD from Harvard University, completing each phase of his studies with honors. Soon after defending his doctoral dissertation, he received his first scientific position at Harvard University, and in 1981, at the age of thirty-four, became a professor. From 1981 to the present, M. Porter continues to work at Harvard.
Throughout his scientific career, M. Porter studied competition, its elements and determinants. He has also been a consultant to many leading companies and an advisor to governments in countries such as Canada and New Zealand; in the early 1980s he became a member of the Commission on Industrial Competition created by President R. Reagan.
3. Main contribution
In progress Competitive Strategy(1980) M. Porter outlined a revolutionary new approach to enterprise strategy. Rejecting the approaches used in this area, M. Porter used the laws of microeconomics to analyze the strategy development process. The first step was to view strategy as a principle that could be applied not only to individual companies, but to entire industrial sectors. Analysis of the strategic requirements of various industries allowed M. Porter to develop the first of his models, the so-calledfive forces
The importance of each of the five forces may vary from industry to industry, but taken together they determine the meaning of long-term profitability. These forces influence the prices firms charge, the level of costs they can afford, and the amount of investment required to compete successfully in a particular industry. The threat of new competitors entering the market limits market share, and therefore potential profits; the bargaining power of buyers and suppliers leads to lower marginal rates of return; the presence of substitute goods can lead to a decrease in industry output. The magnitude of each of the five forces is a function of “industry structure,” which is also defined as “the basic economic and technological characteristics of an industry” (1990: 35).
His second model describes the so-calledgeneric strategies
. According to M. Porter, every company has four main strategic choices. To determine a future generic strategy, it is necessary to solve the following two problems: (1) choose the space for competition, that is, decide whether the company will strive for a broad market or limit itself to specific target segments; (2) choose a competitive advantage - cost leadership or product differentiation.
M. Portermakes clear that there is no single best strategy in any industry; in particular, in the industries he examines as examples - automobiles and shipbuilding - different firms use different strategies. Although the same five competitive forces operate in every industry, responses to them, as noted above, can be different.
Finally, M. Porter introduces the concept of a value chain (see Fig. 3). In essence, the value chain takes into account all the actions of a company that lead to increasing the value of its product. The main activities are those associated with the production of goods and their delivery to the consumer. Supporting activities contribute directly to value addition, such as technological development, or enable the company to operate more efficiently: “firms gain competitive advantage by recognizing new lines of business, new procedures, new technologies or new input materials” (1990: 41). M. Porter believes that the value chain has exclusively important, because it shows that the firm is more than a simple set of activities; All the actions of the firm are connected with each other and through these relationships the necessary trade-offs can be made. In order to successfully respond to industry externalities and achieve competitive goals, a firm must decide which of these activities should be optimized.
In progress Competition in Global Industries
(“Competing in Global Industries”) (1986)M. Porterand his colleagues apply the principles of competitive strategy analysis to companies operating in international markets. As before, based on the results of industry analysis, M. Porter defines two types of international competition. According to his classification, there aremulti-domestic industries
, in which each individual country has its own competition (for example, banking services private individuals) andglobal industries
. At the same time, global is “an industry in which the competitive position of a firm in one country largely depends on its position in other countries, and vice versa” (1986: 18). As examples of such industries, the author highlights the automotive industry and the production of semiconductor equipment. According to M. Porter, the key difference between the two types of industries is that international competition in multi-domestic industries is optional - companies can decide for themselves whether to compete in foreign markets or not - while competition in global industries is inevitable.
International competition is characterized by the fact that the activities that form the value chain are distributed among several different countries. Therefore, in addition to choosing the space to compete and the type of competitive advantage, companies can also choose their strategy options based on the activities that form the value chain (where they occur, in other words, what is their geographic concentration) and their coordination (how closely they are related to each other). . This gives rise to four possible options:
- 1. high concentration, high coordination (a simple global strategy with a value chain of actions carried out in one region or country, and characterized by high centralization);
2. high concentration, low coordination (strategy based on export and decentralization of marketing activities);
3. low concentration, high coordination (strategy of large-scale foreign investments in the implementation of geographically dispersed but well-coordinated operations);
4. low concentration, low coordination (a country-focused strategy in which decentralized subsidiaries focus on their own markets).
IN Competitive Advantage of Nations (“International Competition” (“Competitive Advantages of Nations”)) (1990) M. Porter develops the analysis of competition, identifying its national and sectoral determinants. Confident that “eventually nations will succeed in individual industries because their home environment is the most dynamic and most active, and stimulates and encourages firms to enhance and extend their advantages” (1990: 71) , the scientist identifies the determinants of competitive forces operating at the national level. He names four determinants that can be found in every country and every industry:
- 1. production conditions or the presence in the country of such production factors as necessary for the production of qualified products work force or industrial infrastructure;
2. demand conditions or market characteristics for a particular product or service;
3. the presence of supporting or related industries, such as internationally competitive suppliers or distributors;
4. the nature of the company's strategy, its structure and the characteristics of competition with other companies, including factors such as organizational and managerial climate, as well as the level and nature of internal competition.
An important point that M. Porter emphasizes is that national competitive advantage is often achieved as a result of an initially unfavorable environment, when nations or industries are forced to actively respond to a challenge thrown at them. “Individual factor deficiencies, powerful local buyers, early market saturation, skilled international suppliers, and intense domestic rivalry can be critical to creating and maintaining advantage. Pressure and adversity are powerful stimulants of change and innovation” (1990: 174). It is for this reason that when new industrial forces try to change the existing order, nations experience booms or busts (in terms of competitive advantage).
4. Evaluation
Of value in themselves, first statedM. Porterthe idea of competitive advantage may be gaining more higher value in global competition analysis and identification of international competitive advantages. As M. Porter himself explains, the application of the fundamental concepts he found (five forces, generic strategies, value chain) to international strategy has significantly expanded and deepened our understanding of this subject:
International strategy has typically been presented as a choice between global standardization and local specificity, or as a tension between economic (large, high-productivity production facilities) and political imperatives (local situation, local production) ... neither characterization taking into account the complexity of international strategy choices . A firm's choice of its international strategy implies a search for competitive advantage through global configuration/coordination throughout the value chain... The essence of international strategy is not to find a compromise between concentration and dispersion, but to reduce or eliminate the contradictions between them (1986: 35).
By taking the choice between full globalization and full localization off the agenda for company management and providing a basis for developing a more advanced strategy,M. Porteroffers them ample opportunities and additional freedom of maneuver.
Some shortcomings of M. Porter's works have caused a number of fair criticisms. When the demands of free trade and growing exports introduce elements of international competition into domestic markets In almost all industries, the distinctions it introduced between multi-domestic and global industries may disappear. Its determinants of competition are considered by some scholars to be too simplistic and do not allow for sufficient choice; however, the attractiveness of M. Porter’s models lies precisely in their simplicity; he encourages readers to use them as a starting point to explore the trade-offs and connections between different elements. When used properly, these models provide extremely flexible analysis that can help clarify the situation and determine the overall direction of movement (especially within the framework of international strategy).
5. Conclusion
Works by Michael Porter provided to companies effective methods competitive analysis and strategy development in both domestic and international markets. Having determined the point of intersection of economic and strategic objectives,M. Porterdemonstrated the power of their joint research, allowing him to make important contributions to the development of our understanding of strategy and competition.
