Bank strategic plan concepts: A competitive advantage
by. Howard Lothrop
One of the “old standby” base ideas typically used in developing strategic plans is called “Competitive Advantage.” Competitive advantage is one of strategic planning’s most fundamental concepts. And one of the most misused.
The notion of competitive advantage was developed by Harvard professor Michael Porter in the late 1970s to help explain persistent excess profits apparently earned by various companies over time.
The five key precepts of Porter’s competitive advantage are:
- Competitive rivalry within an industry
- Bargaining power of suppliers
- Bargaining power of customers
- Threat of new entrants
- Threat of substitute products
Over time, these forces have been distilled down in strategic planning to simply talk about a sustainable competitive advantage, which is unique to your bank, and not easily or effectively copied.
The only problem with this shortcut approach is that it really just doesn’t exist. After all, think about your own bank.
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