Michael Porter (1980, 1985) defines competitive strategy as an organization's plan for achieving sustainable competitive advantage over, or reducing the edge of, its adversaries.

How well an individual enteprise performs depends on how well it can manage five key forces:

Discussion point: Provide some examples of ways in which information and communications technology (ICT) impacts each of the five forces.

Porter classifies the strategies that organizations can compete with into two basic categories acrossed a market spectrum:

Discussion point: Provide some examples of ways in which ICT management practices are consistent with these two strategies.

Porter attributes competitive advantage to the ways organizations organize and perform activities that create value for their customers.

  • How do you measure value? Value is measured by the amount customers are willing to pay for its product or services.

  • When is an organization profitable? An organization is profitable when the value exceeds the collective cost of performing all of the required activities.

  • How does an organization gain competitive advantage over its rivals? An organization gains competitive advantage in one of two ways: (1) By providing comparable value to customers, but performing activities more efficiently than its competitors (lower cost), or (2) by performing activities in a unique way that creates greater buyer value and commands a premium price (differentiation).

    How does the support activity of technology development link with the primary value-adding activities and the other support activities?

    How ICT intensive are the activities in the value-chain?

    Discussion point: How is the OM of an organization influenced by:

    How can OM change the boundaries of an industry or alter its structure?