Industry evolution is important strategically because evolution, of course, brings with it changes in the sources of competition I have identified. In the familiar product life-cycle pattern, for example, growth rates change, product differentiation is said to decline as the business becomes more mature, and the companies tend to integrate vertically.
These trends are not so important in themselves; what is critical is whether they af-fect the sources of competition…
Obviously, the trends carrying the highest priority from a strategic standpoint are those that affect the most important sources of competition in the industry and those that elevate the new causes to the forefront…
The framework for analyzing competition that I have described can also be used to predict the eventual profitability of an industry. In long-range planning the task is to examine each competitive force, forecast the magnitude of each underlying cause, and then construct a composite picture of the likely profit potential of the industry…
The key to growth – even survival – is to stake out a position that is less vulnera-ble to attack from head-to-head opponents, whether established or new, and less vul-nerable to erosion from the direction of buyers, suppliers, and substitute goods. Establishing such a position can take many forms–solidifying relationships with favor-able customers, differentiating the product either substantively or psychologically through marketing, integrating forward or backward, establishing technological leadership.