Quotes from Michael E. Porter

consumers tend to be more price sensitive if they are purchasing products that are undifferentiated, expensive relative to their incomes, or of a sort where quality is not particularly important to them.

Competition on dimensions other than price - on product features, support services, delivery time, or brand image, for instance - is less likely to erode profitability because it improves customer value and can support higher prices. p.32

Understanding the competitive forces, and their underlying causes, reveals the roots of an industry's current profitability while providing a framework for anticipating and influencing competition (and profitability) over time. P. 26

The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. The most salient force, however, is not always obvious. P. 26

Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.

Strategy is about making choices; it's about deliberately choosing to be different.

But history tells us that monopolies that are truly benevolent and effective are rare.

Strategy is the creation of a unique and valuable position, involving a different set of activities.

Standardized process guidelines belie the complexity of individual patient circumstances, and freeze care delivery processes rather than foster innovation. What is needed is competition on results, not standardized care. What is needed is competition on results, not just evidence-based medicine. There should be no presumption that good quality is more costly.

As important as the dimensions of rivalry is whether rivals compete on the same dimensions. When all or many competitors aim to meet the same needs or compete on the same attributes, the result is zero-sum competition. P. 33

General management is more than the stewardship of individual functions. Its core is strategy: defining and communicating the company's unique position, making trade-offs, and forging fit among activities.

If the forces are intense, (..) almost no company earns attractive returns on investment. If the forces are benign, (..) many companies are profitable. P. 25

Indeed, one of the most important functions of an explicit, communicated strategy is to guide employees in making choices that arise because of trade-offs in their individual activities and in day-to-day decisions. Improving

Substitutes are always present, but they are easy to overlook because they may appear to be very different from the industry's product p.31

This is analogous to the situation in which the robber says, "stick 'em up, I want your money," and the deranged-looking victim says "If you take it, I will explode this bomb and kill us both!

Competition has taken place at the wrong levels, and on the wrong things. It has gravitated to a zero-sum competition, in which the gains of one system participant come at the expense of others. Participants compete to shift costs to one another, accumulate bargaining power, and limit services. This kind of competition does not create value for patients, but erodes quality, fosters inefficiency, creates excess capacity, and drives up administrative costs, among other nefarious effects.

Understanding industry structure is also essential to effective strategic positioning P. 26

Rather than measuring results and rewarding excellent providers with more patients, the focus has been on lifting all boats by attempting to raise all providers of a service to an acceptable level. The principal tools have been practice guidelines and standards of care that every provider is expected to meet. Evidence-based medicine is another term for practicing based on accepted standards of care.

If a firm can spot an industry in which the fragmented structure does not reflect the underlying economics of competition, this can provide a most significant strategic opportunity. A company can enter such an industry cheaply because of its initial structure. Since there are no underlying economic causes of fragmentation, none of the investment costs or risks of innovations to change underlying economic structure need be borne.

Ask those responsible for each activity to identify how other activities within the company improve or detract from their performance. Second, are there ways to strengthen how activities and groups of activities reinforce one another? Finally, could changes in one activity eliminate the need to perform others?

It is more useful to think in terms of themes that pervade many activities, such as low cost, a particular notion of customer service, or a particular conception of the value delivered.

About half of employer-provided health plans in the United States are self-insured plans, giving employers even more latitude in designing and administering such plans.

One implication is that strategic positions should have a horizon of a decade or more, not of a single planning cycle. Continuity fosters improvements in individual activities and the fit across activities, allowing an organization to build unique capabilities and skills tailored to its strategy. Continuity also reinforces a company's identity. Conversely

Many strategy errors emanate from mistaking the relevant industry, defining it too broadly or too narrowly p.37