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A critical examination of the central contributions of Michael Porter to the development of management thought
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University of Canberra Introduction to Management Assignment 2 – Essay A critical examination of the central contributions of Michael Porter to the development of management thought Kylie McAvoy Student ID: 913232 Tutor: Alan Wheeley Tutorial: Tuesday 18:30 – 19:30 A critical examination of the central contributions of Michael Porter to the development of management thought. Michael Porter is the Bishop William Lawrence University Professor at Harvard. He is seen by many as a leading authority on strategic management and competitiveness. Throughout the western world universities, chief executive officers of billion dollar corporations and governments have used his principles on competitive strategy. Porter’s major contribution has been to detail carefully how management can create and sustain a competitive advantage that will achieve profitability above the industry average (Robbins, 1997, p. 260). Evidence of his work in management thought is highlighted by his expansive writing. Porter has written 16 books and 75 articles to the area of strategic management. Three of his major contributions in strategic management have been the books ‘Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980)’ which is now in it’s 53rd printing, ‘Competitive Advantage: Creating and Sustaining Superior Performance (1985)’ and ‘The Competitive Advantage of Nations (1990)’. These three texts are concerned primarily with structure-conduct-performance theory (O’Shannassy, 1999, p.1) where economics had an important role in the management context. From these theories Porter devised three main frameworks: (the five forces analysis, the value chain and the diamond model). Within his writings these became valuable tools in the management world. Although it is widely accepted that Michael Porter has made a huge contribution in the field of strategic management he is not without his critics. For instance, people such as Mintzberg and O’Shannesy believe that Porter’s scientific approach does not pay enough attention to the firm itself or management intuition. Other studies suggest that Porter’s one generic strategy model does not apply to all industries and his ‘stuck in the middle’ theory is inconsistent. Porter’s main contributions Strategic management came into trend in the 1980’s with a focus on competitive advantage. Michael Porter has made a strong contribution in understanding the external entities confronting organisations. Porter’s major contribution to strategic management has been his ability to help organisations create and sustain a competitive advantage that delivers a higher than average industry profit. In his first major work in 1980, ‘Competitive Strategy: Techniques for Analyzing Industries and Competitors’ Porter’s goal was to ‘present a comprehensive framework of analytical techniques to help a firm analyze its industry as a whole and predict the industry’s future evolution, to understand it’s competitors and its own position, and to translate this analyse into a competitive strategy for a particular business’ (Porter, 1980, p. x). In Porter’s aim of trying to bridge the gap of business economics and strategy he developed the five competitive forces model. The forces involved consist of industry competitors, potential entrants, suppliers, buyers and substitutes. Porter believes that these forces dictate the rules of competition and determine industry profitability as they directly influence prices, cost structures and capital investment requirements and manager’s should assess their organisation by evaluating it in the terms of these five factors. Porter believed that companies needed to choose one of the following strategies: cost-leadership, differentiation or focus. Cost-leadership related to striving to become the lowest cost producer in the relevant industry; differentiation meant striving to develop a product or service that was unique and also valued by buyers; and focus aims at segments of industries such as specific consumer groups or product lines.
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