ABSTRACT
At the broadest level, a competitive strategy is an integrated set of policies designed to create a sustainable competitive advantage for the firm adopting the policies. This chapter provides a framework to analyze competition and competitive strategy. One of the most prominent of such frameworks is that developed by Michael Porter. The chapter begins by reviewing the Porter framework and then applying it to the microelectronics industry. The review pays special attention to the roles that technical alliances play in the strategic process. The chapter discusses the limitations of Porter's approach as a way of understanding – and formulating – strategy in this industry. It provides a detailed comparison of the dominant strategic tendencies in the United States and Japan. This comparison will help to sharpen the issues in the ongoing debate over international competitiveness. Technology strategy is perhaps the most important aspect of a firm's competitive strategy in the semiconductor industry.
