...2) Brief Analysis Based on Porter’s Five Forces Based on Dell case study, I will write a brief analysis based on the Five Forces Model by Michael Porter. In the five forces model we have these forces – the threat of substitutes, the entry of new competitors, rivalry among existing firms, the bargaining power of suppliers and the bargaining power of buyers. These factors can be determining the average rate of return for the firm in an industry. Each of Porter’s five forces impacts the average rate of return for the firms in an industry by applying pressure on industry profitability. Well-managed companies try to position their firms in a way that avoids or diminishes these forces – in an attempt to beat the average rate of return for the industry. The first force that I need to highlight is the threat of substitutes which means the price that consumers are willing to pay for a product depends in part on the availability of substitute products. Dell need to make sure that the price offered to the market is affordable based on the quality it was set, so that it can eliminate the price that offered by its competitors and maintained the demand from the customers. The second force is the threat of new competitors or entrants in the market. If the firms in an industry are highly profitable, the industry becomes a magnet to new entrants. So, Dell has to ensure that it can keep the number of entrants low by offering the quality products and the best service to the customers. It...
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...single plan or single planning approach that can deal with the complexity of contemporary markets. What is needed is a continuous process for churning out new plans, for differentiated products and services, in order to compete in a dynamic environment. This chapter presents a brief overview of the various approaches to strategic planning and provides an overview of the planning literature. There is a lot of material to slog through, but each approach to planning has something to offer. This overview will set the stage for presenting the Ten–Ten planning process in the next chapter. The next chapter will integrate the various planning approaches and present a simplified, yet robust approach to planning called the Ten–Ten planning process. The key benefit of the Ten–Ten planning process is that it can be used for developing business plans in a very short time span. 8.1 Planning Concepts There are two generic planning strategies that a business can pursue.Michael Porter originally identified three generic strategies. He noted that a business can also focus on a market that is not very competitive. Most people consider this to be a special case of the other two strategies. See Porter (1980). It can strive to be efficient, it can differentiate, or both. In other words, a firm can focus on delivering Midas versions of products, Hermes versions of products, or both. A firm that employs a strategy of efficiency strives to be the low-cost producer and compete on the basis of charging less...
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...Fathoming Porter’s five forces model in the internet era G.D. Karagiannopoulos, N. Georgopoulos and K. Nikolopoulos G.D. Karagiannopoulos is at TREK Consulting SA, Athens, Greece, N. Georgopoulos is at the Department of Business Administration, University of Piraeus, Piraeus, Greece and K. Nikolopoulos is at the Lancaster Centre for Forecasting, Department of Management Science, Lancaster University Management School, Lancaster, UK. Abstract Purpose – To investigate the impact of the internet in ‘‘traditional’’ market rules. Design/methodology/approach – An opinion piece based on Michael Porter’s arguments for the new economy. Finding – Michael Porter’s arguments for the new economy provide a useful starting point in the analysis of the environment. His arguments are based on exaggerated phenomena. Factors that determine a sector’s profitability could be enriched with the innovation that prevails in the particular sector. Originality/value – An attempt to criticize Porter’s thoughts regarding internet and industry structure and to enrich the Porter’s five forces model with the ‘‘power of innovation’’. Keywords Internet, Market forces, Economics, Innovation Paper type Viewpoint Introduction Distinguishing between internet and non-internet, or between the so-called new economy and the old economy is today as useless as it would have been a century ago to compare companies with telephones to those without. By using the infrastructure of the emerging electric and telephone...
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...The Strategic Management Frameworks Arnoldo Hax Alfred P. Sloan Professor of Management The Frameworks for Competitive Positioning Porter Resource-Based View of the Firm • The Delta Model • • Porter’s Framework for Explaining the Profitability of a Business Competitive Positioning Achieving sustainable competitive advantage Industry Structure Factors affecting industry profitability Strategy Formulation and Implementation Defining and executing the managerial tasks Elements of Industry Structure: Porter’s Five-Forces Barriers to Entry - Economies of scale - Product differentiation - Brand identification - Switching cost - Access to distribution channels - Capital requirements - Access to latest technology - Experience & learning effects Government Action - Industry protection - Industry regulation - Consistency of policies - Capital movements among countries - Custom duties - Foreign exchange - Foreign ownership - Assistance provided to competitors New Entrants Threat of new entrants Rivalry Among Competitors - Concentration & balance among competitors - Industry growth - Fixed (or storage) cost - Product differentiation - Intermittent capacity increasing - Switching costs - Corporate strategic stakes Industry Competitors Intensity of Rivalry Barriers to Exit - Asset specialization - One-time cost of exit - Strategic interrelationships with other businesses - Emotional barriers - Government & social restrictions Suppliers Bargaining...
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...Table of Contents Introduction 2 Part 1: External Analysis 3 1.1 Macro-Environment Analysis 3 1.2 Industry Analysis 4 Porter’s Five Forces of Competition Analysis of Netflix 4 1.2 Opportunities and threats (Partial SWOT) 5 Part 2: Internal Analysis 6 2.1 Value Chain Model 6 2.2 Competencies Framework 7 2.3 VRIO Framework 8 2.4 Strengths and Weaknesses (partial SWOT) 9 Part 3: Netflix Issues and Challenges……………………………………………………………………………………………..10 Part 4: The selection of strategic options 11 4.1 Strategy Clock model and the Porter’s Generic Strategy Model 11 4.2 Strategic Options 12 Part 5 – Conclusions 14 References 15 Appendix 17 Introduction Netflix, set up in 2000, is a television show and movie rental Company. It slowly became a leader in this field by offering DVD-by-mail and online video streaming services. It provides a subscription based model. According to this model the customers utilize the products and services of Netflix through a monthly fee rather than a pay as you use rate. Netflix has been expanding its reach of providing services to other geographies with its two service lines to places like the UK, Ireland, Canada, Latin America and the Caribbean. Among the Porter’s generic strategies, Netflix has adapted the Differentiation/Cost Leadership strategy as their target customer base is broad and they also provided to renters a low cost alternative to the otherwise traditional video rental stores. The major stakeholders of Netflix are...
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...Micheal Porter projected five forces model in capacity to analyze competitive strategy of the management in any industry. These forces hold an exigent spectrum of importance in the airline industry because of enormous market saturation. The concentration of airline service providers in the market are more than the actual needed demand. Due to immense competition, the level of competition is enhanced within the complex market offering in terms of technology, prices, in-flight entertainment, customer services, and so on. Hence, this paper is presented to analyze the Porter’s five forces model in the horizon of airline industry. Porter has also given the more enhanced framework of forces by including the sixth force as well, which will subsequently be analyzed according to said industry. Porter’s Six Forces Model Analysis The extension of Porter’s five forces model is actually regarded as Porter’s six forces model. The enhanced stimuli of forces did not gain such popularity as that of its previous model integrating five forces only, because of its less positive acceptance. The model is similar to the five forces model with only difference of sixth force in the framework. Hence, all Porter’s (1980) forces are explained below with their certitude rating in the parameters of airline industry. Force 1: Threats of New Entrants The threat of new firm into the same industry is the force which describes the dependability of new entrants on the entering barriers. These barriers...
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...Analysis Of Porter's Generic Strategies Strategic Themes Provide product that is on-trend, differentiated, distinctive and inspired by select popular fashion trends and pop culture for all of our target customers, but with a primary focus on expressive women and expressive moms. Improve brand marketing effectiveness by implementing a “house of brands” architecture that covers all of our major customer segments and builds distinctiveness and focus in our product assortment. Provide a great shopping experience through improved customer engagement, and leveraging our real estate to support new store formats consistent with the repositioning of our brand. Maintain efficient operations by building greater speed and flexibility into the supply chain to deliver the right product to the right store at the right time in the appropriate proportions across the approximately 4,600 store network. On-Trend Targeted Product We identifies fashion trends timely and integrates these insights into on-trend product in our stores. Generic Strategy - Porter Porter’s generic strategies: low cost, differentiation, specialization. Key stakeholders & their influence. PEST model, macro environment. – Five Forces model, micro/industry environment. Porter's Five Forces Model And Three Generic Strategies Porter's Five Forces Model Porter's Five Competitive Forces model is a framework made by Michael Porter that is used by businesses when thinking about business strategy and the impact...
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...1. Introduction 2. External Analysis Porter’s Five Forces Analysis – Ford The competitive structure of an industry is an important element of identifying factors that are a menace of decreasing profitability. One of the most adequate forms of assessing competitive issues is Michael Porter’s five-force analysis. According to Michael Porter understanding the external environment in which a firm operates in, is essential for a successful business. Porter (2008) displayed five such factors: 1) threat of new entrants, 2) the power of suppliers, 3) the power of buyers, 4) the threat of substitutes, and 5) rivalry among existing competitors. The evaluation of these five forces provides managers with the ability to form an optimal strategy, due to external opportunities and threats being taken into consideration. The existence of new entrants in the automobile industry may force prices down and put pressure on profits. However, there are barriers to entry that favor established firms; economies of scale is mildly attractive, despite the expectation of significant economies of scale, due to indications that large size may not be as significant as one would assume. Nonetheless, entry into the automobile industry requires a large capital investment from any new entrant, indicating economies of scale is a substantial barrier to entry. Opportunity factors connected to product differentiation predict product differentiation will go from mildly attractive to highly attractive;...
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...the strategy into action takes place in the firm’s business model, which details the firm’s competitive tactics and initiatives” (Rothaermel, p. 11). Basically, a strategy will explain how a firm will make money but the difference between a strategy and the business model is the business model explains how the firm intends to make the money AND puts it into action; the strategy just gives the theory. Business models put strategy into action. A strategy focuses on the company in relation to its competition and the business model focuses on the company in isolation. 1.1a. How they are similar is both business strategies and business models look toward a firm’s future and are both essential in decision-making within a company. A firm’s strategy and business model working hand in hand becomes the nuts and bolts behind how a firm intends to achieve its overall goal, which is to make and increase profit. Discussion Question 1.2 (3 part to this question): 1.2a. Crowdsourcing is defined as “the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community rather than from traditional employees or suppliers” (Merriam-Webster, 2014). The word is a combination of the words 'crowd' and 'outsourcing' and the idea is to take work and outsource it to a crowd of workers. Dell is keen on offering this service because the business model is awesome and translates real-time market research and design...
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...the strategy into action takes place in the firm’s business model, which details the firm’s competitive tactics and initiatives” (Rothaermel, p. 11). Basically, a strategy will explain how a firm will make money but the difference between a strategy and the business model is the business model explains how the firm intends to make the money AND puts it into action; the strategy just gives the theory. Business models put strategy into action. A strategy focuses on the company in relation to its competition and the business model focuses on the company in isolation. 1.1a. How they are similar is both business strategies and business models look toward a firm’s future and are both essential in decision-making within a company. A firm’s strategy and business model working hand in hand becomes the nuts and bolts behind how a firm intends to achieve its overall goal, which is to make and increase profit. Discussion Question 1.2 (3 part to this question): 1.2a. Crowdsourcing is defined as “the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community rather than from traditional employees or suppliers” (Merriam-Webster, 2014). The word is a combination of the words 'crowd' and 'outsourcing' and the idea is to take work and outsource it to a crowd of workers. Dell is keen on offering this service because the business model is awesome and translates real-time market research and design...
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...business strategy can be studied through Porter’s five forces model Figure 01: Porter’s five forces model. Adapted from: http://notesdesk.com/notes/strategy/porters-five-forces-model-porters-model Last Accessed on: 11 August 2012. 1. Threat of Substitute Products: Threat of substitutes is a big issue when planning strategy. Threat is high when there are other products available as substitutes. Customers switching cost is low so it is a threat for the company. Example of Grafton College: The substitute products/services for Grafton College will be: • Books • Videotapes • Training Institutes • Computer Based Training 2. Threat of New Entrants: Entrance of new entrant into the market is always a threat for any company. Threat of new entry is high when barrier to entry is low and there is lack of product differentiation. Example of Grafton...
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...Course 12: Competitive (Part Intelligence (Part 2 of 2) Prepared by: Matt H. Evans, CPA, CMA, CFM This course provides more in-depth coverage about competitive intelligence – specific techniques and models used as well as CI Systems. Before taking this course, you should complete Part 1 of this course. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple-choice exam which you can take over the internet at www.exinfm.com/training/course12-2 Chapter 1 Critical Concepts Before we get into Part 2 of this short course, let’s touch on the fundamentals behind competitive intelligence. From Part 1 of this course, we learned that competitive intelligence relies on a very analytical process to transform data and information into intelligence. We also understand that competitive intelligence is not just about studying the competition, but studying the entire external landscape - customers, suppliers, regulators, and all forces that impact the organization. Therefore, our analysis must be very broad in scope. The primary output from competitive intelligence is the ability to make forward-looking decisions. For example, Jack Welch, former CEO of General Electric determined strategy based on key intelligence questions: What is the detailed global position of your business and that of your competitors: market shares, strengths by product line, and by region today? What actions have your competitors...
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...Table of Contents 1. PESTEL analysis 2 2. Porter's five forces model 4 3. Strengths and weaknesses of Apple, Inc (7-s model) 6 4. Core competency of Apple Inc and VRIO model. What were Apple’s competitive advantages? 8 5. New formula to create a sustainable competitive advantage 8 6. Assessment of Apple’s initial strategy for the iPhone. Quick change to a different strategy. 8 7. EFE and IFE matrix; strategic recommendations on Apple Inc SWOT matrix; SPACE matrix; evaluation of strategic choices on QSPM. 9 8. Balanced scorecards 13 PESTEL analysis Beginning in the 1950's, research on organisations emphasised the importance of understanding the wider macro-economic environment in which organisations operate. An organisation on its own cannot affect environmental factors, nor can environmental factors affect the profitability of an industry or an organisation. Conducting a strategic analysis entails scanning the general or macro-economic environment to detect and understand the broad, long term trends. [1] The PEST analysis divided the general environment into the following categories: 1. Political 2. Economic 3. Social 4. Technological 5. Environmental 6. Legal 1) Political-Legal Forces * Different countries have different legislations and these in some ways restrict the company or give opportunities to the company. * NAFTA, European Union and other regional trade unions open doors to market in Europe, Asia, Latin America that...
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...Education Institutions (PHEIs) including private Universities and University Colleges. As competition intensifies it becomes increasingly pertinent to ask “What sustainable competitive advantage should the Private Higher Education Institutions (PHEIs) have to achieve market leadership in the Malaysian education industry?” For the smaller PHEIs, it is a question of survival itself. This paper aims to provide a theoretical study of some of the key strategic activities of the leading PHEIs to answer this question. The literature review covering both foreign and local sources indicates three key factors of sustainable competitive advantage, i.e. branding and image, the physical aspects of higher education including location and facilities, and the mode of delivery. The paper will seek to identify these factors amongst the market leaders to ascertain the validity of the secondary data via critical analysis of their activities. The theoretical framework employed for the analysis will be Michael Porter’s Three Generic Strategies and Five Competitive Forces. The PHEIs have largely evolved into business entities and this development makes the framework appropriate for the study. 2082 2 INTERNATIONAL CONFERENCE ON BUSINESS AND ECONOMIC RESEARCH (2 ICBER 2011) PROCEEDING nd nd List of tables Table1. Summary of...
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...ANSWERS ~ COMPETITIVE ADVANTAGE 1. Using Porter’s five-forces framework, discuss why profitability in the European textile industry is lower than that in book publishing. Porter’s five-forces model of competitive industry structure proposes that the determinants of industry attractiveness and long-run profitability are the threat of new entrants, the threat of substitutes, the bargaining power of buyers and suppliers, and the rivalry between existing competitors. Using these forces we shall examine the European textile and book publishing industries: Threat of new entrants: many newly industrialized countries develop a textile industry since the skills and technology are relatively easy to acquire. Book publishing relies more on commissioning authors with the skills to write best sellers: it is easier to make a shirt than a book in Hong Kong that will sell in Europe. The threat of new entrants is likely to be lower for book publishing than textiles. Bargaining power of suppliers and buyers: it is difficult to distinguish between two industries on these bases. Suppliers of basic textile commodities (such as wool and cotton) are unlikely to have a great deal of power; authors (unless already proven winners) certainly do not. In both industries large retail outlets dominate sales to consumers. However, where retail price maintenance is practised there may be less pressure on producers to trim prices. Threat of substitutes: the key to understanding differences in profit...
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