BASE – Revista de Administração e Contabilidade da Unisinos

5(3):236-238, setembro/dezembro 2008

c 2008 by Unisinos - doi: 10.4013/base.20083.07

COMENTÁRIO

MICHAEL PORTER’S CONTRIBUTION TO STRATEGIC

MANAGEMENT
A CONTRIBUIÇÃO DE MICHAEL PORTER À ADMINISTRAÇÃO ESTRATÉGICA

JAN J. JÖRGENSEN Michael E. Porter is recognized as a leading authority on strategy and competitiveness.
jan.jorgensen@mcgill.ca His works have generated analytical tools used by business schools, managers, and public policy
makers: five-forces analysis, generic strategies, the value chain, activity systems, the national
diamond and industry innovation clusters. Broader applications of Porter’s analytical frameworks
have included health care, non-profit organization strategy, economic development of inner
cities, national competitiveness, clusters and innovation capacity, cross-industry linkages,
environmental quality and competitiveness, and regional economic development (Institute for
Strategy and Competitiveness, 2008).
Prior to Porter, strategic management rested on the SWOT framework – strengths,
weaknesses, opportunities and threats – developed by the general management group at
Harvard (Andrews, 1971). This approach involved checklists of factors to assess opportunities and
threats in the organization’s external environment and strengths and weakness in its internal
environment. Although widely used, the SWOT framework lacked an analytical foundation.
Other approaches such as Chandler’s strategy and structure framework (1962) supplemented
SWOT, drawing on business history to show how a firm’s strategy and structure responded to
changes in the external environment.
Porter’s Competitive Strategy (1980) transformed strategic management in six ways.
First, it applied microeconomics and industrial organization (IO) concepts to business level
strategy to assess the attractiveness of an industry and positions within an industry. In the
1970s Porter had himself contributed to the IO literature, analyzing the relationship between
firm performance and external factors including exit barriers, mobility barriers, branding, and
market structure (Porter, 1976; Caves and Porter, 1977; Stonehouse and Snowdon, 2007).
Second, the work turned the IO structure, conduct and performance approach on its head. IO
had identified barriers that reduced competition at the industry level. The new work asked:
how could managers manipulate mobility barriers to achieve above average returns? Third, it
extended the analysis of competitive forces beyond immediate rivals to include the power of
suppliers and buyers, the threat of new entrants and the attraction of substitutes. The relative
power of these forces determined the attractiveness and average returns of an industry. Fourth, it
outlined a set of generic strategies that could create a long run defensible position with superior
returns in a given industry: overall cost leadership, differentiation and focus. Fifth, it proposed
JAN J. JÖRGENSEN 237

five generic industry environments - fragmented, emerging, dominant framework for analyzing the internal strengths and
mature, declining and global - to demonstrate how the level of weaknesses of the original SWOT framework. Proponents of the
industry concentration, the stage of the industry life cycle and resource-based view argue firm-specific resources, capabilities
the extent of international competition shape competitive forces and/or competences rather than generic strategies in a given
and strategies. Finally, it explored the existence of strategic industry structure are the true source of competitive advantage.
groups within an industry and their implications for strategy, Porter has criticized the resource-based view for its “nagging
showing that there was more than one way to be profitable in imprecision” (Stonehouse and Snowdon, 2007). It is true that
a heterogeneous industry structure. Rivals could succeed by the resource-based view suffers from not having a rigorous
competing along quite different strategic dimensions. supporting subfield such as industrial organization offered
Beyond industry analysis, Competitive Strategy also competitive strategy. Yet Porter himself has contributed to
offered insights on the scope of the firm, on game theory internal perspectives on strategy with the value-chain and
applications to strategy, and on competitor analysis. Chapter activity system concepts.
14 on vertical integration explored both the advantages and Indeed, Porter’s contributions to strategic management
disadvantages of backward and forward integration in different have alternated between external and internal perspectives.
industry contexts. Chapter 4 on market signals (4) and chapter Competitive Strategy (Porter, 1980) focused on industry structure
15 on capacity expansion (15) applied game theory concepts to in the external environment of the firm. The prescription to find
competitive strategy: credible threats, retaliation, commitment, attractive industry assumed the firm possessed the resources or
reputation, trust, pre-emption, rational versus irrational stances, capabilities needed to compete in that industry, or the financial
and signaling. The model for competitor analysis (chapter 3) resources to acquire a firm with the requisite capabilities.
explores how a rival’s capabilities, assumptions, future goals and Competitive Strategy (Porter, 1980) contains a strong
current strategy affect its response profile. The model includes claim about generic strategies that a firm risks getting “stuck
the rival’s current competitive strategy, but goes well beyond in the middle” if it tries to pursue simultaneously a low-cost
this to examine cognitive factors (assumptions of the rival), advantage and differentiation. Surprisingly, this claim does
motivation (future goals) and resources (capabilities). not appear to rest on analysis of industry structure, where
A number of debates have surrounded the five-forces one might indeed find firms that simultaneously offer high
analysis: whether it omits other relevant forces, whether it perceived value to consumers at relative low cost to the firm as
matters how industry boundaries are drawn, and whether it Japanese automobile firms did in the late 1970s and early 1980s.
continues to be relevant in innovative and highly internationalized Instead, “stuck in the middle” derives from Porter’s analysis
competitive environments. Nominees for additions to the of the “different resources and skills” required for successful
five-forces have included government and “complementors”: implementation of overall cost leadership – process engineering
products or services to be used with the industry’s product, such skills, low cost distribution, tight cost control systems, high
as fuel service stations for automobiles or software for video capital investments – versus those required for differentiation –
game consoles. While such additions are found in strategic strong marketing skills, product engineering, strong cooperation
management textbooks, Porter himself objected to adding a sixth with marketing channels, strong coordination among R&D,
or seventh force, arguing that complementors and government product development and marketing, ability to attract creative
are not additional competitive forces, but rather factors that act people, and qualitative control systems (Porter, 1980).
through the original five forces: rivals, suppliers, buyers, new Competitive Advantage (Porter, 1985), his second major work,
entrants and substitutes (Porter, 2008). had an internal perspective, focusing on the firm’s value chain. It
On whether it matters where one draws industry argued that the appropriate scope of the firm, which primary and
boundaries, Porter declared confidently in chapter 1 that this supporting activities should be done internally and which should
mattered little as the five-forces analysis would provide the be outsourced or shared with other organizations, depended on
needed tools to assess the attractiveness of any industry. Yet whether the activities were essential for developing or maintaining
one might argue where one draws industry boundaries does the firm’s competitive advantage. Those activities deemed central
matter in a world where innovation and falling trade barriers for competitive advantage needed to be owned by the firm.
reveal new rivals, entrants and substitutes. Industry boundaries In his third major work, Competitive Advantage of Nations
appear more porous and subjective currently than in the more (1990), Porter turned his attention again to the external
stable protected industries of post-war national economies. The environment, but also shifted his primary attention from what
five forces analysis requires considerably more effort and skill yielded above average returns for the individual firm to what
to apply in a globalizing innovative context. factors made an industry competitive internationally. Whereas
The industry structure approach to strategy, with its the 1980 work advised managers to seek an “attractive industry”
focus on the external environment, is often contrasted with with mobility barriers and avoid spoiling the industry by driving
the resource-based view of competitive advantage (Barney, down profitability through vigorous competition, the 1990
1991; Mahoney and Pandian, 1992) which represents the work pointed to vigorous domestic competition as a vital factor

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238 MICHAEL PORTER’S CONTRIBUTION TO STRATEGIC MANAGEMENT

to achieve the quality and innovation an industry needed to Internationalization and innovation have probably
compete internationally. Whereas government had been a lessened the power of the five-forces analysis to provide clear
background factor operating through the five forces in the 1980 guidelines for competitive strategy. Yet managers still need to
work and whereas the assumption of a relatively stable industry be mindful of its applicability, and it can also help understand
structure left little to chance, in the 1990 work both government what has changed and what remains constant in industries
and chance were important supplementary factors in the undergoing transitions including globalization. Similarly, Porter’s
“national diamond.” The national diamond consisted of four industry innovation clusters continue to be relevant for strategy-
key components: firm rivalry based on strategy and structure, making in dynamic environments where learning and networks
related and supporting industries, input factor conditions and are important for developing competitive advantage.
demand conditions. In the national diamond, government can
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(Ghemawat et al., 1999). The article’s claim that Japanese
firms lacked competitive strategy and pursued only operational
effectiveness, an advantage eroded by imitation, provoked
debate and reflection among Japanese managers and policy
JAN J. JÖRGENSEN
makers. This led to the establishment of the annual Porter Prize Desautels Faculty of Management, McGill University
for Japanese companies that have achieved superior profitability 1001 Sherbrooke St. West,
though a unique competitive strategy based on innovation in Montreal, Quebec H3A 1G5, Canada
products or processes.

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