Profits Quote by Michael E. Porter

“Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly from an industry to its customers. P.32” quote by Michael E. Porter — Download Open image

““Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly from an industry to its customers. P.32””

Michael E. Porter

About This Quote

Source Book: Competitive Strategy, 1980

Price wars erode profits, shifting gains from firms to consumers.

In simple terms: Competing on price hurts profitability.

Key Takeaway

Focus on value rather than price.

Themes

economics competition profitability strategy

Mood

analytical serious

Type

business strategic

When to use this quote

pricing strategy
product differentiation
market entry

Key Concepts

price elasticity market dynamics

Questions to Reflect On

How can firms compete without lowering prices?
What alternatives to price wars exist?

A Different Perspective

Price competition can trigger a race to the bottom.

★ ★ ★ ★ ★ 2.8 out of 5 (3 ratings)

More by Michael E. Porter

“Competition on dimensions other than price - on product features, support services, delivery time, or brand image, for instance - is less likely to…

Michael E. Porter

Image

“THE U.S. HEALTH CARE SYSTEM is on a dangerous path, with a toxic combination of high costs, uneven quality, frequent errors, and limited access…

Michael E. Porter

Image

“Programs in operational effectiveness produce reassuring progress, although superior profitability may remain elusive. Business publications and consultants flood the market with information about what…

Michael E. Porter

Image

“U.S. consumers report higher dissatisfaction with their health care system than do consumers in other developed nations.”

Michael E. Porter

Image

“MOST COMPANIES OWE THEIR INITIAL success to a unique strategic position involving clear trade-offs. Activities once were aligned with that position.”

Michael E. Porter

Image

“Many countries have state-dominated or state-run systems with little competition. Their historically lower costs and favorable mortality statistics have led some to advocate that…

Michael E. Porter

Image

“One of the essential tasks in industry analysis is to distinguish temporary or cyclical changes from structural changes. P.29”

Michael E. Porter

Image

“The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. The most salient force,…

Michael E. Porter

Image

“Standardized process guidelines belie the complexity of individual patient circumstances, and freeze care delivery processes rather than foster innovation. What is needed is competition…

Michael E. Porter

Image

“Good quality is less costly because of more accurate diagnoses, fewer treatment errors, lower complication rates, faster recovery, less invasive treatment, and the minimization…

Michael E. Porter

Image

“General management is more than the stewardship of individual functions. Its core is strategy: defining and communicating the company’s unique position, making trade-offs, and…

Michael E. Porter