Saturday, February 7, 2015

When comparing companies, make sure they are truly comparable...

From Understanding Michael Porter: The Essential Guide to Competition and Strategy:
Is motor oil used in car parts of the same industry as motor oil used in trucks and stationary engines? The oil itself is similar. But automotive oil is marketed through consumer advertising, sold to fragmented customers through powerful channels, and produced locally to offset the high logistics costs of small packaging. Truck and power generation lubricants face a different industry structure—different customers and selling channels, different supply chains, and so on. From a strategy perspective, these are distinct industries.