THE COMPETITIVE ADVANTAGE OF NATIONS

Abstract

Competitive advantage introduces a whole new way of understanding what a firm does. Porter's groundbreaking concept of the value chain disaggregates a company into 'activities', or the  discreet functions or processes that represents the elemental  building blocks of competitive advantage. Now an essential part of international business thinking, competitive advantage takes strategy from broad vision to an internally consistent configuration of activities. Its powerful framework provides the tools to understand the drivers of cost and company's relative cost position. Porter's value chain enables managers to isolate the understanding sources of buyer value that  will command a premium price, and the reasons one product or service substitutes for another. He shows how competitive advantage lies not only in activities themselves but in the way activities relate to each other, to supplier activities and to customer activities. That the phrase 'competitive advantage' and sustainable competitive advantage' have become common place in testimony to the power of Porter's ideas. Competitive advantage has guided countless companies, business School students, and scholars in understanding the roots of competition. Porter's work captures the extraordinary complexity of competition in a way that makes both concrete and actionable.