ENT 610 – Week 3 Discussion Structure & Profit

One of the most common misconceptions in business regarding competition is the notion that success comes from “being the best”. Another common misconception is that this competition is defined as a direct contest between rivals. I will be honest and admit that I have always thought of these two sentiments as an unspoken truth. However, in the reading Understanding Michael Porter, this notion is thought to be too narrow. The author goes on to pin tout that “The real point of competition is not to beat your rivals…the point is to earn profits” (Magretta, 2012).

Earning profits leads to an entirely different ball game. This completion involves many players and the battle is over who will ultimately cease the created value of an industry. In order to better position one’s company  among fellow team players there are several things an entrepreneur can do. One of the most common actions taken are performing company analysis. One of the most common is a SWOT analysis which looks at internal factors and how they effect a business. Another common form is the PEST analysis, which analyzes external factors and how they effect a business. Each seeks to view the opportunities and threats that may be posed and seeks to ensure that a company is a strong as can be.

Another common analysis is done on the industry structure and reviews five forces:  the intensity of rivalry among existing competitors, the bargaining power of buyers (the industry’s customers), the threat of new entrants (Magretta, 2012). You can get important feedback regarding an industry by looking at their structure. Porter’s five forces tells you immediately how the industry “works”, how it creates and shares value (Magretta, 2012).


Hyman, M. R., & Sierra, J. J. (2010). Marketing research kit for dummies. Hoboken, NJ: John Wiley & Sons Inc.

Magretta, J. (2012). Understanding Michael Porter: the essential guide to competition and strategy. Boston, Mass: Harvard Business Review Press.

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