The Five Competitive Forces That Shape Strategy

Editor’s Note: In 1979, Harvard Business Review published “How Competitive Forces Shape Strategy” by a young economist and associate professor, Michael E. Porter. It was his first HBR article, and it started a revolution in the strategy field. In subsequent decades, Porter has brought his signature economic rigor to the study of competitive strategy for corporations, regions, nations, and, more recently, health care and philanthropy. In essence, the job of the strategist is to understand and cope with competition. As different from one another as industries might appear on the surface, the underlying drivers of profitability are the same. The Five Forces That Shape Industry Competition If the forces are intense, as they are in such industries as airlines, textiles, and hotels, almost no company earns attractive returns on investment. Forces That Shape Competition The configuration of the five forces differs by industry.

Featured case: ZARA: Staying Fast and Fresh | The Case Centre, for educators Felipe Caro, UCLA Anderson School of Management, discusses his award-winning case ZARA: Staying Fast and Fresh. Zara, the flagship brand of the Spanish retail conglomerate Inditex, is one of the leading retailers of fast-fashion, churning out frequent in-season assortment changes of knockoffs of popular runway styles and trendy fashions. The company has received a lot of attention for its centralized distribution model. In the past 10 years Inditex, and more specifically Zara, has been studied by MBA students, the world over, to understand its success in distribution and supply chain efficiency. Why Zara? Zara is definitely a success story in the apparel world - comparable to Toyota in the automobile industry - and big part of the success is due to its operations. Making contact My initial contact with Zara goes back to 2005 when I had just finished my PhD. Improving the case After completion I find that the best way to improve a case is teaching it in the classroom. Teaching objectives

Lean manufacturing Overview[edit] The difference between these two approaches is not the goal itself, but rather the prime approach to achieving it. The implementation of smooth flow exposes quality problems that already existed, and thus waste reduction naturally happens as a consequence. The advantage claimed for this approach is that it naturally takes a system-wide perspective, whereas a waste focus sometimes wrongly assumes this perspective. Both lean and TPS can be seen as a loosely connected set of potentially competing principles whose goal is cost reduction by the elimination of waste.[5] These principles include: Pull processing, Perfect first-time quality, Waste minimization, Continuous improvement, Flexibility, Building and maintaining a long term relationship with suppliers, Autonomation, Load leveling and Production flow and Visual control. Origins[edit] Lean aims to make the work simple enough to understand, do and manage. A brief history of waste reduction thinking[edit] 20th century[edit]