Strategic Management and Competitive Advantage
Strategic Management and Competitive Advantage
This chapter reviews the main strategic management paradigms used to analyze or explain a firm’s performance in creating value for shareholders. It discusses how limited access to a market and the existence of entry barriers can enhance a firm’s profitability. It describes Porter’s five-forces paradigm and how it can help structure market analysis. It also explains how, within a given industry, a firm can build competitive advantage through production efficiency (cost leadership), branding (differentiation leadership), or a focus strategy. Finally, the chapter discusses the importance of sustaining competitive advantage dynamically.
Keywords: firm value creation, profitability, industry analysis, production efficiency, branding, focus strategy
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