Understanding Michael Porter

CHAPTER 5

Trade-offs:

The Linchpin

IN THE LAST CHAPTER, I presented Porter’s first two tests of strategy: a unique value proposition and the tailored value chain required to deliver it. If there is one important takeaway message, it is that strategy requires choice. Competitive advantage depends on making choices that are different from those of rivals, on making trade-offs. This is Porter’s third test. Trade-offs play such a critical role that it’s no exaggeration to call them strategy’s linchpin. They hold a strategy together as they contribute to both creating and sustaining competitive advantage.

The need to make trade-offs is yet another ...