synonymcompetitive edge(Management terms) generally refers to the theory of competitive advantage
Competitive Advantage theory,Management Theory, byHarvard UniversityBusiness Research InstituteMichael PorterPorter's international competitive advantage model (also known asDiamond model）It includes four national specific determinants and two external forces.Four kinds of domestic determinants include factor conditions, demand conditions, related and supporting industries, corporate strategy, organization and competition.The two external forces areRandom eventAnd the government.
baudIt believes that a country's trade advantage is not simply determined by a country'snatural resourcesLabor force, interest rate and exchange rate are largely determined by a country'sIndustrial innovationAnd upgrade capabilities.Because contemporary international competition depends more on the creation and absorption of knowledge,competitive edgeThe formation and development ofEconomiesThe result of the comprehensive effect of various internal factors, a country's values, cultureeconomic structureAnd history become the source of competitive advantage.
Porter's Competitive Advantage Theory
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Michael·baud(Michael E. Porter) YesHarvard UniversityFamous professor of the Business Research Institute, one of the most influential professors in the worldManagement scientistone of.He was appointed President of the United States in 1983ReaganThe Chairman of the Industrial Competition Committee of the United States of America initiated the theory of enterprise competition strategy and triggered a discussion boom of competitiveness in the United States and even the world.He is also an advisor to many business leaders and government officials around the world.He has won the Wiltz Prize for EconomicsAdam Smith Award, three timesMcKinsey Awards , with many universitiesHonorary Doctoral Degree 。Porter has 14 books, among which the most influential ones are Inter brand Selection, Strategy and Bilateral Market Power (1976), Competitive Strategy (1980), Competitive Advantage (1985)《National competitiveness》(1990), etc.
Five competitive forces and three general strategies
baudHe has made a very important contribution to the theory of competitive strategy, "five competitive forces" - analysisIndustrial environmentOfStructured approachIs his outstanding thought (see SWOT analysis);His more influential contribution is that he clearly proposed three general strategies in his book Competitive Strategy.
Porter believes that in the struggle against the five competitive forces, there are three types of successstrategic thinkingThese three ideas are: 1Total cost leadership strategy；2、Differentiation strategy；3、Focus strategy 。Porter believes that the goal of these strategic types is to make the enterprise's operation better than others in the industrial competition: in some industries, this means that enterprises can obtain higher profits;In other industries, the success of a strategy may only be that enterprises can gain some in an absolute senseMicro incomeOfnecessary condition。Sometimes enterprises may pursue more than one basic goal, butbaudIt is considered that the possibility of this situation is very small.Because the implementation of any kind of strategy needs to go all out and have an organizational arrangement to support this strategy.If the enterprise has more than one basic goal, the resources in these aspects will be scattered.
Cost leadership requires firmly establishing efficient and large-scaleProduction facilities, go all out on the basis of experiencecost reduction, pay close attention to cost andAdministrative expensesControl, and minimize the risk ofCost。In order to achieve these goals, it is necessary to attach great importance to cost in management.Although the quality, service and other aspectsNot to be ignoredHowever, throughout the whole strategy, the cost is lower than that of competitors.The low cost of the company means that when other companies have lost profits in the process of competition, the company can still gain profits.
gaintotal costThe lowest advantageous position usually requires a higherRelative market shareOr other advantages, such as good contact with the supply of raw materials, may also require that the product design be easy to manufacture and maintain a wide range of related product lines to dispersefixed cost, and to establishStarting batchAnd serve all major customer groups.
The total cost leadership is very attractive.Once the company has won such a positionMarginsIt can also reinvest in new equipment and modern facilities to maintain its leading position in costReinvestmentOften low costprecondition。
Differentiation strategy is to differentiate the products or services provided by the company, and establish something unique in the whole industry.There are many ways to realize the differentiation strategy: design famous brand image, unique technology, performance characteristicsCustomer service, business network and other aspects of uniqueness.The most ideal situation is that the company has its differentiated characteristics in several aspects.for exampleCrawler tractorThe company is not only famous for its commercial network and excellent spare parts supply service, but also for its high-quality and durableproduct qualityIt enjoys high reputation.
If the differentiation strategy is successfully implemented, it will become a positive strategy to win a high level of income in an industry, because it has been establishedDefensive positionAgainst the five competitive forces, although the form of defense is different from cost leadership.baudIt is believed that the implementation of differentiation strategy will sometimes lead to greatermarket shareThe activities of are contradictory.The implementation of differentiation strategy often requires companies to be prepared for the exclusiveness of this strategy.This strategy cannot be balanced with increasing market share.The activities of establishing the company's differentiation strategy are always accompanied by high costs. Sometimes even if customers across the industry understand the company's unique advantages, not all customers will be willing or able to pay the high prices required by the company.
3. Centralized strategy
The specialization strategy is to focus on a particular customer group, a segment of a product line or a regional market.Like differentiation strategies, specialization strategies can take many forms.Although both low-cost and differentiated strategies aim to achieve their goals within the whole industry, the whole of the centralized strategy is built around the center of serving a specific goal well. Every functional policy it develops and implements should consider this central idea.This strategy relies on the premise that the company's business specialization can serve a narrow strategic target with high efficiency and better results, thus surpassing the competitors in a wider range.baudIt is believed that the result of this is that the company has achieved differentiation by meeting the needs of special objects, or achieved low cost when serving this object, or both.Such a company can make its profit potential exceed the general level of the industry.These advantages protect the company against threats from various competitive forces.
But the strategy of specialization often means limiting the overall market share that can be obtained.The strategy of specialization necessarily includesprofit marginThe relationship with sales at the expense of each other.
Whether enterprises or countries want to maintain invincible competitiveness, what is competitiveness?Porter's《competitive strategy 》The book was valued by the academic and practical circles of American business management, and it was very valuable in Luoyang for a while.At first glance, Porter's competitive strategy theory is complex, but in fact, its context is clear. His theory focuses on three main points:Bala AnalysisEnterprise value chainDiamond system.
Five Forces Analysis
In his book Competitive Strategy, Porter proposed the famous five forces analysis framework.He believes that there are five factors affecting the industrial competition, namely, "the threat of new entrants"“purchaserThe bargaining power of (customers) "," the threat of substitutes (or services) "“supplierThe bargaining power of "and“Existing competitorsThe confrontation situation ".Through the analysis of these five aspects, we can measure theCompetitive intensityAnd profit potential.
In traditionalIndustrial EconomicsChinese economists have discussed in depthmarket structureThe impact on the behavior and performance of manufacturers, "monopoly can bringExcess profit”It becomes a well-known basic theorem.
baudFrom this perspective, it is believed thatbasic principleHe tried to maintain his monopoly, and he developed three kinds of logic based on itgeneralityStrategies: "low-cost strategy", "specialized and refined strategy" and“Differentiation strategy”。
Although Porter's theory is not original, his advantage is that he can integrateIndustrial economyIt has developed a set of simple, clear and practical practices in combination with the theory of enterprise management and practice, which has been favored by the business management practitioners.
Diamond system
In addition to industrial and enterprise strategies, Porter extends his theory to international competition. He mentioned that "in international competition, enterprises can extend their activities to several different locations, and through global network coordination, activities in different locations can generate potential competitive advantages", for exampleSwitzerlandChocolate, Japanese robotsWest GermanyIn 1990, Porter published the book "National Competitive Advantage" focusing ongeographical positionRole in competitive advantage.In addition, Porter applies the concept of enterprise competitive advantage to the national level in this book to explore how a country can establish its competitive advantage.For this topic,baudThe "diamond system" (also known asRhombic theory）Analysis schema for.He believes that the ability of domestic enterprises to create domestic competitive advantages may be strengthened, including:
I“production factors”, a country willBasic conditions, such as natural resources, educationInfrastructureThe ability to transform into special advantages.Now the country has perfecttraffic systemAndtelecommunication networkThere are also the best human resources, so the basic production factors can no longer maintain the competitive advantage, but establish special advantages, such as high professional skills and applied technology, such asNetherlandsIt is not because it is located in the tropics that it has the leading flower industry, but because it has highly specialized research institutions in the cultivation, packaging and transportation of flowers.
2、 "Demand status", the amount of domestic market demand for the industry or services andMaturity。For example, because of the narrow land and dense population in Japanese families, household appliances are oriented towards small, portable televisions, stereosVideo tapeTo develop, because the domestic market has a group of most discerning consumers, Japan has the world's most sophisticated and highest value household appliances industry.
III“Related industriesAnd supporting industry performance ".If an industry wants to reach its peak, it must have world-class suppliers and benefit from the competition of enterprises in related industries. These manufacturers and suppliers form an industrial "cluster" that can promote innovation.For example, Italy leads the worldGold and silver jewelryYee, because of the ItalianMachinery industryIt has created 60% of the global jewelry production machinery market and is recycled in ItalyValuable metalsOur machinery also leads the world.
4、 "Enterprise strategy, structure and competitors".This is the last factor that affects competitive advantage.The organization mode of the enterprisemanagement styleThe way of competition depends on the local environment and history.If an enterprise's hometown encourages innovation, there are policies and rules to stimulate the enterprise to train technology, improve ability andInvestment in fixed assetsEnterprises are naturally competitive.In addition, if there are strong local competitors, it will also stimulate enterprises to constantly improve.
The impact of these four factors on each industry is different and should be evaluated separately. More importantly, the diamond system is a dynamic system, and each factor within it will pull and influence the performance of other factors.
