Basic principals of competitive strategy
Industry(whether product or service) is a group of competitors producing products or services that compete directly with each other-to understand competition
Distinct industry with similar sources of competitive advantage

2 central concerns underlie the choice of competitive strategy:
Industry structure-where firms compete. Industries differ in the nature of competition, and they don’t offer equal opportunities for sustained profitability.
Positioning within an industry-some positions are more profitable than others
Both industry structure and competitive position are dynamic. Industries can become more or less attractive over time, as barriers to entry or other elements of industry structure change. Competitive position reflects an unending battle among competitors.

Industry attractiveness and competitive position can be shaped by firms.

The structural analysis of industries
In any industry, whether it is domestic or international, the nature of competition is embodied in 5 competitive forces
The threat of new entrants-brand loyalty, economies of scale, the need to penetrate distribution channels.
The threat of substitute products or services
The bargaining power of suppliers
The bargaining power of buyers
The rivalry among the existing competitiors
The strengths of the 5 forces varies from industry to industry and determines long-term industry profitability. In industries in which the 5 forces are favourable e.g. soft drinks, many competitors earn attractive returns on invested capital. The 5 competitive forces determine industry profitability because they shape the price firms can charge, the costs they have to bear, and the investment required to compete in the industry. The threat of new entrants limits the overall profit potential in the industry, because new entrants bring new capacity and seek