Competition redefined
D. S. Cheema

On Competition
by Michael E. Porter
A Harvard Business Review Book.
Pages 544. $39.95.

OVER the last two decades or so, most businesses have undergone massive changes in an era of economic globalisation. In an increasingly competitive world, it is an idea that opens new doors, a technology that helps find a solution or a deep insight that provides all that is needed to succeed in any field. Many great thinkers and leading authors in various areas of business are continually helping organisations to bring a cutting edge to their thinking by designing innovative practices for business.

On Competition is the result of Porterís 20 years of studying industry performance and competitiveness. Porter, a professor at Harvard Business School, is one of the most innovative economists of his time and a leading authority on competitive strategy. The book is in the form of a collection of works and has 12 (out of 15) of Porterís best articles published since 1985. It also contains contributions from his eminent professional colleagues. The essence of the entire collection is that every company or nation must master competition and differentiate itself from its rivals if it has to survive and thrive.

The book is divided into five parts to allow easy access to a wide range of the writerís work. While the first and second chapters of Part I provide insight into five competitive forces, i.e., threat of entry, power of suppliers, power of buyers, threat of substitutes and rivalry among existing competitors, another two chapters examine the vital role of information technology in competitive strategy.

Part II, The Competitive of Locations, has three chapters that discuss the role of locations in competition. Porter has developed a new theory of the competitiveness of nations, states and other geographic areas. The all-important ideas in competitiveness theory and the concept of clusters form part of another chapter.

Competitive Solutions to Social Problem forms Part III and explains how the understanding of competition and value creation offers powerful insights into almost every societal problem. One of Porterís ideas of improving environmental performance through better technology and methods has come to be known as ĎPorter Hypothesisí. This section emphasises the integration of economic and social policies rather than considering them distinct and conflicting.

Part IV makes a case that philanthropy is not only about giving money, as giving delivers limited social benefits and recommends how foundations, corporations and NGOs can add value, to make philanthropy truly useful for society. Providing a clear framework of understanding the points of intersection between the company and the environment in which it operates, it suggests that social responsibility should be made integral to the company strategy.

Part V has only one article, Seven Surprises of New CEOs. The "seven surprises" are related with the fact that the CEO has full responsibility for the companyís success or failure, but most of the things that determine success and failure are very hard to be controlled by any CEO. These "surprises" are the wisdom distilled out from the experience gained by Porter and his colleagues while conducting "The New CEO Workshop" at Harvard Business School.

The "inserts" in every chapter either provide an easy-to-understand brief or relate the thought process of the authors with practical aspects of business which help the reader to understand and appreciate that innovative ideas are not mere theoretical concepts but also pragmatic in nature.

This collection demands a serious investment of time and effort on the part of the reader to reap benefits, but the unique insight into the complex phenomenon of competition makes the investment worth it. The writer has definitely been able to make "sense of the staggering power of competition to make things better both for companions and society", as he puts it in his own words.