Competitive Advantage: Creating and Sustaining Superior Performance 
The essential complement to the pathbreaking book Competitive Strategy, Michael E. Porter's Competitive Advantage explores the underpinnings of competitive advantage in the individual firm. With over 30 printings in English and translated into thirteen languages, this second volume in Porter's landmark trilogy describes how a firm actually gains an advantage over its rivals. Competitive Advantage introduces a whole new way of understanding what a firm does. Porter's groundbreaking concept of the value chain disaggregates a company into "activities," or the discrete functions or processes that represent the elemental building blocks of competitive advantage.
Now an essential part of international business thinking, Competitive Advantage takes strategy from broad vision to an internally consistent configuration of activities. Its powerful framework provides the tools to understand the drivers of cost and a company's relative cost position. Porter's value chain enables managers to isolate the underlying sources of buyer value that will command a premium price, and the reasons why one product or service substitutes for another. He shows how competitive advantage lies not only in activities themselves but in the way activities relate to each other, to supplier activities, and to customer activities. Competitive Advantage also provides for the first time the tools to strategically segment an industry and rigorously assess the competitive logic of diversification.
That the phrases "competitive advantage" and "sustainable competitive advantage" have become commonplace is testimony to the power of Porter's ideas. Competitive Advantage has guided countless companies, business school students, and scholars in understanding the roots of competition. Porter's work captures the extraordinary complexity of competition in a way that makes strategy both concrete and actionable.
Reviews
The classic paper 'What is Strategy' still has me thinking and mulling over -definitely an uncontested winner as my year 2006's best read!
Competitive advantage is the key to a company's performance in competitive markets. This is very important in today's global markets when firms face global competition. The book explains how a firm can create and sustain a competitive advantage. It discusses the need for firms to effectively translate their broad competitive strategies into specific action steps required to gain competitive advantage. In particular, the book bridges the gap that many firms have between strategy formulation and implementation and treats the two subjects together.
Porter describes how a firm can put the three generic competitive strategies of cost leadership, differentiation and focus into practice. It highlights, for example, how a firm can differentiate itself from its rivals or how a firm can gain a cost advantage.
The book highlights the need for all the functions of an organization to play their role in creating competitive advantage. Production, marketing, finance, human resources and others all play essential roles for a firm in a combined and integrated way.
The book is critical reading for managers who play a part in a firm's strategy (that means all managers). Students studying strategic management will find the book very informative and easy to follow.