Competitive Strategy by Michael E. Porter

Author:Michael E. Porter
Language: eng
Format: epub
Publisher: Free Press

The evolutionary processes are a tool for predicting industry changes. Each evolutionary process is the basis of a key strategic question. For example, the potential impact of government regulatory change on an industry’s structure means that a company must ask itself, “Are there any government actions on the horizon that may influence some element of the structure of my industry? If so, what does the change do for my relative strategic position, and how can I prepare to deal with it effectively now?” A similar question can be formulated for each of the other evolutionary processes discussed above. The set of questions that result should be asked on a repeated basis, perhaps even formally through the strategic planning process.

Furthermore, each evolutionary process identifies a number of key strategic signals, or pieces of key strategic information, for which the firm must constantly scan its environment. The entry of an established firm from another industry, a key development affecting a substitute product, and so on should cause a red light to go in the minds of executives charged with maintaining the strategic health of a business. This red light should trigger a chain of analysis to predict the significance of the change for the industry and the appropriate response.

Finally, it is important to note that learning, experience, increasing market size, and several other of the processes discussed above will be operating even if there are no important distinct events to signal this. The implication is that regular attention should be given to structural changes that may be resulting from these hidden processes.

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