Analyzing Management Strategies

Abstract

Every business has its strategies and plans at hand in order to achieve their goals and objectives both at long term and at short term. No matter if the organization is small or large, international or not every organization makes strategies at through which they are meant to achieve their goals in the future, and if these strategies are not fully worked out, the consequences can be devastating. Porter's five forces model is the best for managers to take make strategic planning and take decisions accordingly. The theory is revolve around five forces that are important for managers to take into consideration in order to have competitive edge over rivals and can survive in competitive environment.

The report describes Porter's five forces model and its implications in today's competitive environment.

Analyzing Management Strategies

Answer 1

"Model of Porter's five forces" was developed by Professor of Strategy Michael Porter in 1979. Michael Porter assumes that the notion of competition can be enlarged within an industry, should be considered as a competitor any economic operator may reduce the ability of firms involved to generate profit. And Michael Porter identifies five forces that determine it according to the competitive structure of an industry of goods or services: threat of new entrants, threat of substitute products, bargaining power of suppliers, bargaining power of customers and rivalry between existing competitors.

The model best describes the industry analysis and enable the organization to make decision on the basis of trends and threats exist in the market. It does not only focus on competition but also emphasizes on retaining customers and suppliers. An industry is a group of firms that markets products which are probably close substitutes to each other. Every industry has its own dynamics and the factor for profitability is different. (Porter, 2008).

Answer 2

Michael Porter has identified five types of forces that can be exercised in a more or less intense in the industry. These forces are exerted by groups of actors (potential entrants, substitute products companies, suppliers, customers and competitors) that influence the intensity of competition in the industry observed. Analysis and prioritization of the influence of these stakeholder groups must pinpoint the key success factors (CSF) to control to gain a competitive advantage. Every firm should analyze the nature of competition and competitors in the industry it is working. Porter gave the 5 forces model in 1979 to analyze the external and internal sources that effect the industry environment. He gave a framework for industry analysis and strategy formulation. He identified 5 forces that mainly influence an industry. And a firm to take competitive edge from its rivals would need to look into all these forces. The analysis allows assessing the attractiveness of an industry and key success factors that a company must master to succeed (Baker, 2004). Here is a somewhat more detailed presentation of five forces:

1. The threat of new entrants: is determined by the size of entry barriers in the industry. Indeed, markets have a number of obstacles that do not ...