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"Almost no consensus exists about what corporate strategy is, much less about how a company should formulate it," Michael Porter wrote in 1987. By then, he'd taught at Harvard Business School for more than a decade, having received tenure at the tender age of 26, and had formed his own, very definite, opinions about what strategy is.
Porter argued that "the essence of strategy formulation is coping with competition" and that competition in an industry comes not simply from direct competitors, but from the underlying economics of the industry. After careful research and thoughtful analysis, he arrived at a practical model of competition, based on economic principles. Porter described that model, his famous "five forces" framework of competition, in Competitive Strategy: Techniques for Analyzing Industries and Competitors, published in 1980.
Porter's study of industry groups revealed five determinants of long-term industry profitability. The first is the character of the rivalry among competitors in an industry, which can range from vicious and warlike to gentlemanly and subdued. Obviously, the more intense the rivalry, the more difficult it is to compete in an industry. Second is the threat of new entrants. If there are substantial barriers...