Creating a defendable position

Competitive advantage is the basis for most strategic decisions and its’ creation a key
issue of management. The most important concepts of competitive strategy are Michael
Porter's "five forces" and "generic strategies", published in his books Competitive Strategy
(1980) and Competitive Advantage (1985). The first sections will describe his basic ideas
and explain how the five forces are connected to the generic strategies. This is followed by
arguments in which way one strategy helps to create a defendable position in an industry. A company is not isolated, but exists in a complex network. "The five forces framework
helps identify the sources of competition in an industry or sector"1 and the important
factors in the environment of a company are: Competitive Rivalry, purchasing power of
supplier, purchasing power of buyer, threat of new entrants and of substitutes2 (Figure
1). [...]