MODULE 14-15-16 PDF

MODULE 14 lower prices. Ultimately, the presence of strong substitute Porter’s 5 Forces - is an analysis tool that dictates a high level of threat. tries to measure the intensity or level of...

MODULE 14 lower prices. Ultimately, the presence of strong substitute Porter’s 5 Forces - is an analysis tool that dictates a high level of threat. tries to measure the intensity or level of 4. Bargaining power of buyers - competition of a certain industry. He argues buyers can influence the prices of that the joint measure of the different products. This can happen if some industrial forces helps determine the conditions are met. potential for profitability in the industry, 5. Bargaining power of suppliers - and that potential is measured by the long- suppliers can affect prices in a term return of investment. similar way the buyers can. Given 1. Rivalry - this force refers to the that some conditions are present; intensity of competition in the suppliers can influence prices. industry. This force is directly affected by all the other forces. High level of intensity of competition in MODULE 15 an industry would signify difficulty Organizational Resources – The in succeeding in such industry. One resources of an organization are its basic indicator is the number of building blocks. This means that the lack of competitors. The higher the number resources will therefore guarantee a weak of competitors, the higher the level foundation for an organization. The lack of of competition. Changing prices understanding of what resources are needed would instantly make competitors also can affect how an organization will react to such move and may follow move forward and succeed. Resources are suit. either tangible or intangible assets. Assets 2. Threat of new entrants - typically, that provide an organization with an an industry would have firms advantage can be attributed as company’s competing for long periods of time strength, and assets that create already. However, if an industry is vulnerabilities for an organization are attractive, it typically attracts new considered weaknesses. entrants. The number of new entrants, however, are limited Capabilities – An organization’s ability to according to the entry barriers utilize and use its resources exceptionally is existing in the industry. High entry called capabilities. Capabilities consists of barriers help lower new entrants, processes and routines managing the and as it goes lower, it typically interaction of resources that processes attracts more entrants. inputs to outputs. 3. Threat of substitute products - substitutes are products that appear Competencies – When these capabilities to be different from your usual coordinate and become cross-functionally product, but can perform the same integrated, they are now known as a or satisfy the same need. The competency. A collection of competencies presence of substitutes can also that exist within the whole corporation, and limit the price firms can place on not limited to a single unit or division their products. If products become within it, and can do it exceedingly well is more expensive, consumers will known as a core competency. Core begin seeking substitutes that have competencies that are done well by an organization, and exclusive to it or at least not easily copied, becomes one if its organization can be matched to its strengths competitive advantages or strengths. and weaknesses. It also forces managers to create various kinds of growth and VRIO Framework – The VRIO retrenchment strategies. It can help Framework is an analysis tool designed to generate corporate and business level identify and protect the competencies that strategies. provides long-term competitive advantage. Four categories: Value – “Does the resource help the company achieve its goals or exploit 1. S-O (strength-opportunity) opportunities?” A valuable resource strategies – SO strategies are enables the company to meet customer generated by thinking of ways in needs, reduce costs, or outperform which a company or business unit competitors. could use its strengths to take advantage of opportunities. This is Rarity/Rare – “Is the resource rare or also known as Maxi-Maxi unique, meaning few or no competitors strategy. This exhibits an attacking have it?” Rare resources are less common strategy. in the industry and give the company a 2. S-T (strength-threat) strategies – competitive edge because few or no other ST strategies considers the companies possess them. company’s strength in order to Imitability – “Is the resource difficult or avoid threats. This is known as expensive for competitors to copy or Maxi-Mini strategy. This is a replicate?” If a resource is hard to imitate, defensive strategy. such as through patents, unique historical 3. W-O (weakness-opportunity) circumstances, or proprietary knowledge, it strategies – WO strategies try to offers a more sustainable competitive take advantage of opportunities by advantage. overcoming weaknesses. This is known as Mini-Maxi strategy. Organization – “Is the company structured This also identifies the weaknesses and ready to fully exploit this resource?” that can hinder to take advantage of This involves having the right opportunities. Its aim is to build organizational processes, culture, and strengths for attacking systems in place to effectively utilize opportunities. valuable, rare, and difficult-to-imitate 4. W-T (weakness-threat) strategy – resources. WT strategies are defensive strategies aiming to minimize weaknesses and avoid threats. This MODULE 16 is known as a Mini-Mini strategy. Formulating Alternative Strategies using This also identifies the vulnerable TOWS (SWOT) matrix points of the company where threats can make more impact. The TOWS or the SWOT matrix is analysis tool for evaluating corporate situation. However, it is also used to generate strategies. The tool illustrates hoe external factors (opportunities and threats) facing an