How Strong is Your Firm's Competitive Advantage, Second Edition

If a firm successfully enters a new market, creates a new product, or designs new innovations for an existing product, its just a matter of time before competitors follow suit. And the influx of competition inevitably places downward pressure on both price and profitability. But the speed at which competitors invade ones market is not the same in all industries; some are more resistant to the forces of competition than others. In 1979, Harvard economist Michael Porter theorized his Five Forces Model (updated in 2008). The Five Forces Model identifies the characteristics that can help insulate a firm from competitive forces. For the firm that seeks to put together a business plan, or for the firm that is considering opportunities for diversification, an understanding of the Five Forces Model is essential.

Daniel R. Marburger is professor of economics at Arizona State University. He has a BS in general management from Purdue University, an MBA from the University of Cincinnati, and a PhD in economics from Arizona State University. He also has three years of experience as a marketing analyst for a Fortune 500 company. He has taught managerial economics at the MBA level for more than 20 years, and has published over 20 scholarly articles in journals such as Industrial and Labor Relations Review, Southern Economic Journal, Economic Inquiry, Managerial and Decision Economics, and the Journal of Economic Education.