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Cost Leadership, Differentiation and Focus |
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Competitive Advantage |
Summary of Cost Leadership, Differentiation and Focus (Porter). Abstract |
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The Competitive
Advantage (CA) model
of Porter learns that competitive strategy is about taking
offensive or defensive action to create a defendable position in an
industry, in order to cope successfully with competitive forces and
generate a superior return on investment.
According to Michael
Porter, the basis of above-average performance within an industry is
sustainable competitive advantage.
There are
2 basics types of CA:
Both can be more broadly approached or narrow, which results in the third viable competitive strategy:
Approach 1 to CA: Cost leadership.
CA model 2: Differentiation.
CA model 3: Focus.
Stuck in the middle:
From a Value Based Management point of view, the CA approach to strategy helps to build a relative competitive advantage, together with Porter's Value Chain framework. Taken together, they can be seen as one of two dimensions in maximizing corporate value creation. The other value creation dimension is the Market/Industry Attractiveness for which another model from Porter is often used: the Competitive Forces model.
T I P : Here you can discuss and learn a lot more about Competitive Advantage. Compare with Competitive Advantage: Parenting Advantage | Positioning | Prahalad | Delta Model | BCG Matrix | Greiner | Kay | M&A | Diamond Model | Experience Curve | Twelve Principles of the Network Economy | Blue Ocean Strategy | Relative Value of Growth |
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