Suggested Answers to Discussion Questions
1. How can a company measure its competitive advantage? How does a firm know if
it is gaining or losing competitive advantage?
Competitive advantage is defined in Chapter 9 as arising from “a match between a
firm’s distinctive competencies and the factors critical for success within its industry.”
When a company achieves this match, it will deliver superior perceived value relative
2. Outline Porter’s five forces model of industry competition. How are the various
barriers of entry relevant to global marketing?
The five forces model, a business school staple for nearly a quarter of a century, is
shown in Figure 9-1. The first force, the threat of new entrants, depends on the
3. What are three strategic positions identified by Michael Porter?
4. Identify three strategic positions. Pick a successful company that you know and
identify that company’s strategic position.
5. Give an example of a company that illustrates each of the four generic strategies
that can lead to competitive advantage: overall cost leadership, cost focus,
differentiation, and focused differentiation.
Overall cost leadership: Bic, Wal-Mart
Cost focus: IKEA, Kia
6. What is the relationship, if any, between Porter’s four generic strategies and his
three strategic positions?
7. Briefly describe Hamel and Prahalad’s framework for competitive advantage.
Hamel and Prahalad argue that, while Western companies have been preoccupied with
outdated concepts such as generic strategies, competitors in Japan have developed a
8. How can a nation achieve competitive advantage?
Porter identifies four determinants of national competitive advantage:
9. Do you agree with D’Aveni that no action or strategic advantage can be
sustained for long? Why? Why not?
This certainly is a question that can be answered both ways. One could use GE as an
example of a company that has sustained strategic advantage for a long time.
Conversely, according to D’Aveni, the only source of a truly sustainable competitive
advantage is the company’s ability to manage its dynamic strategic interactions with