Powerful suppliers determine the cost of raw material. Successful firms are
the ones which sustain their competitive advantage by making sure they
retain their value, and that it isn't lost into industry rivals, new entrants, or
lower prices, or appropriated by powerful buyers or suppliers.
Within these competitive constraints, Porter isolates three generic
strategies that can give a company a competitive advantage: cost
Jeadership (a cheaper product); differentiation (a better product than those
competitors); or focus on a narrow market s~ment. He criticizes buying
companies rather than beating them, and diversification for its own sake,
suggesting - like most other prominent business authors - that companies
should rather look for strategic, synergy-producing links among business
units in related industries.