A competitive advantage is a key dimension of survival and success in environments where organizations must compete with each other. This advantage is not a trick that can last a few months (e.g. a smart advertising campaign), but an
inherent capacity to sustain superior performance on a long-term basis. The search
for such advantage must therefore start with a systematic analysis of the industry
and sector in which the enterprise operates, and of the competitive forces at play.
Much of the most important development in strategic thinking in the past 20
years has been in concepts and models that facilitate this kind of analysis. The
“five forces” model proposed by Michael Porter identifies five key areas that
management needs to understand:
(1) the competitive structure within the
industry/segment itself
(2) the threat of new entrants
(3) the threat of substitute
products or technologies
(4) the power of suppliers; and
(5) the power of customers
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