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BUSINESS STRATEGIES USING MICHAEL PORTER’S FRAMEWORK (1979) The five forces is an outside in business unit strategy tool that is used to make an analysis of attractiveness or value of an industry structure. The model encourages organizations to look beyond direct competitors when assessing strategy...

BUSINESS STRATEGIES USING MICHAEL PORTER’S FRAMEWORK (1979) The five forces is an outside in business unit strategy tool that is used to make an analysis of attractiveness or value of an industry structure. The model encourages organizations to look beyond direct competitors when assessing strategy and instead consider broader environmental forces. The five competitive forces that shapes strategy: 1. Buyer power 2. Supplier power 3. Threats of new entrants 4. Threats of substitutes 5. Existing competitive rivalry Advantages of five forces model Organizations can learn how profit is divided among five forces It enables organizations to identify which players are in control and set rules It provides company strategists with insight and a baseline to evaluate the company’s strengths and weaknesses It provides a holistic overview of any industry and helps strategists identify the most important factors that can affect their position in the industry It helps strategists to think more comprehensively about the industry structure and discover non-obvious opportunities that can also attract higher investments and affect the company’s future growth 1. Threat of Substitutes - Refers to products in other industries. A product’s demand and price elasticity is affected by a price change of a substitute product, as more substitutes becomes available, the demand becomes elastic due to higher alternatives. 2. Buyer Power - The impact that customers have on a producing industry. When buyer power is strong, the relationship to the producing industry is near monopsony - a market where there are many suppliers and one buyer. Under this condition, the buyer sets the price. Buyers are powerful IF: Buyers are concentrated or few Buyers purchase a significant portion of the output distribution Buyers possess a credible backward integration threat Buyers are weak IF: Producers threaten forward integration or take over own distribution Significant buyer switching cost where buyer cannot easily switch to another product Buyers are fragmented (many, different) Producers supply critical portion of buyer’s input  3. Supplier Power - A producing industry requires raw materials- labor, components and other supplies. This leads to buyer-supplier relationships between the industry and the firms that provide the raw materials. If the supplier is powerful, it can exert influence on the producing industry such as selling raw materials at a high price to capture some of the industry’s profit. Suppliers are powerful IF: Credible forward integration threat by supplers Suppliers are concentrated Significant cost to switch suppliers Customers are powerful Suppliers are weak IF: Many competitive suppliers Purchase commodity products Credible backward integration threat by purchasers Concentrated purchasers Customers weak 4. Barriers to entry/Threat of new entry - The possibility that new firms may enter the industry also affects competition Sources: Government creates barriers Patents and proprietary knowledge serve to restrict entry into an industry Asset specificity inhibits entry into an industry Organizational (internal economies of scale) Easy to Enter if there is: Difficult to Enter if there is: Common technology Patented or proprietary know-how Little brand franchise Difficulty in brand switching Access to distribution channels Restricted distribution channels Low scale threshold high scale threshold Easy to Exit if there are: Difficult to Exit if there are: Salable assets Specialized assets Low exit costs High exit costs Independent businesses Interrelated businesses PROJECT BUSINESS MANAGEMENT METHODOLOGY - Framework construction project manager use to plan, execute, monitor and control the outcomes of construction 5 Phases 1. Project Initiation 2. Project Planning 3. Project Execution 4. Project Monitoring and Control 5. Project Closure Most effective project business management methodology for construction 1. Advanced Work Packaging (AWP) - aligns engineering, procurement and construction 2. The Critical Path Method (CPM) - the longest sequence of activities is called the Critical Path 3. Lean Project Management - emphasizes the continuous improvement of processes to increase efficiency and reduce waste - SIX SIGMA is a data-driven, quality assurance method that organizations use to improve performance and profit, and decrease errors - SIX SIGMA certification is a set of credentials verifying your expertise in the SIX SIGMA METHOD 4. The Waterfall Method - a traditional project management approach characterized by a linear and sequential workflow where progress flows like a waterfall. a. Gantt Charts are the preferred tool as it allows to map subtasks, dependencies and each phase of the project 1. Requirements - requirements are gathered at the beginning  2. Design - the design phase is broken into logical and physical design 3. Implementation - programmers assimilate the requirements and specifications to produce code 4. Verification - the phase when customers review the product 5. Maintenance - the customer is regularly using the product DECISION-MAKING IN BUSINESS PROJECT CONSTRUCTION MANAGEMENT - The process of making important decisions Business Project Management Approach in Construction Management - Rational Decision Making - logical and consistent with intent to maximize value - Bounded Rationality Approach - occurs when managers fail to search for potential options or knowingly limits the number of options that choose satisfactory than best - Intuitive Decision Making - arriving at decisions without conscious reasoning, based on feeling, judgement and experience - Creative Decision Making - the ability to come up with something new Decision Making Techniques - SWOT ANALYSIS - Decision Matrix - Brainstorming - Process of Elimination - Decision Support System GROUP 3 REPORTING Entrepreneurial Management - Concept of utilizing creative and innovative abilities, skills, and expertise to efficiently open and manage startup organization - 3 Main Roles: Job Creation, Innovation, Growth and profitability - 4 Pillars: Problem, Idea, Experimentation, Solution - 5 Operations: a. Identifying Business opportunities b. Creating and executing business plans c. Setting goals d. Managing resources e. Navigating uncertainties - 7 Core Elements: a. Risk Assessment and Mitigation b. Resource Allocation c. Creative Thinking and Innovation d. Strategic Planning e. Leadership and Team building f. Financial Management  g. Market Research and customer insights Corporate Management - Also referred to as intrapreneurial management. Managing existing operations of a company someone else founded - deals with the process of leading, administrating and directing a company. The success of any business is tightly associated with the success of the corporate management of the organization. Entrepreneurial Knowledge - The concepts and skills individual possess during the start-up and development of growth-oriented ventures Entrepreneur - Is someone who starts or owns a business; a problem solver who considers a macro-problem and finds an innovative solution to it Entrepreneurial Marketing - “as the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.” - Aspects include: a. Needs, wants, and demands b. Products and services c. Information d. Exchange e. Market f. Competition g. environment Managerial Competencies of Entrepreneur 1. Risk taking ability 2. Networking skills 3. Build the right team 4. Great vision Entrepreneur Management Risk 1. Financial Risk 2. Legal and regulatory risk 3. Market risk 4. Customer Risk 5. Competitive Risk 6. Operational Risk Business Operations - the day-to-day tasks a business performs to run and ultimately make a profit. - are the core activities that transform inputs like raw materials, labor, and capital into outputs like products and services. Steps of Planning Process - involves setting objectives for a specific period. - outlining necessary actions / Analyzing courses of action. - allocating resources efficiently / Selecting the best alternative to accomplish that objective. - creating timelines. Planning - is a significant step that managers take at all levels. - involves thinking before doing. - is the blueprint of the course of the action required. Planning Process It demands thorough analysis, a clear understanding of goals, and regular reviews and adjustments to ensure objectives are met effectively. Lvl of planning · Strategic planning · Tactical Planning · Operational Planning Controlling process · involves managers setting goals, · measuring performance, · making adjustments to improve operations · control costs. Planning  · involves daily tasks like scheduling, dispatch inspection, quality checking, managing inventory, and handling supplies and equipment. Control · ensures that these tasks are carried out efficiently and cost-effectively. Planning comes before Control Planning and control are both two important functions of management · the relationship between planning and control are like two sides of the same coin that means · we cannot tell when the planning function ends and the control functions begins. Tactical Planning · is the process of translating a corporation or team's strategic plan into smaller objectives and goals. Operational Planning · involves the development of detailed procedures and processes necessary to implement the tactical plans of an organization. · It focuses on the day-to-day activities and operations required to achieve short-term objectives. TYPES OF CONTROL - STRATEGIC CONTROL Focuses on assessing whether current trends and changes align with the overall strategic objectives of the organization. Involves monitoring the implementation of strategies, evaluating deviations from the planned - TACTICAL CONTROL Focuses on implementing specific tactics that contribute to the overall strategy It also involves regular reviews and adjustments to ensure that day-to-day activities align with organizational goals. - OPERATIONAL CONTROL A MID-LEVEL FORM OF CONTROL THAT DEALS WITH OVERSEEING DAY-TO-DAY OPERATIONS AND PROCESSES WITHIN THE ORGANIZATION. Management theorists and experts have devised several techniques over the years. They often divide these techniques into two categories: TRADITIONAL AND MODERN CONTROL Quality Control: Quality control methods such as inspection, statistical quality control (SQC), total quality management (TQM), Six Sigma, quality circles (QC), benchmarking, etc., focus on ensuring product or service quality meets defined standards. Networking Skills - It is an essential skill for many industries, including sales, business development, retail, banking and others. Marketing - the activities a company undertakes to promote the buying or selling of its products or services. GROUP 4 REPORTING Corporate Innovation Systems - The set of actors, activities, resources, and institutions and the causal interrelations that are important for the innovative performance of a corporation - 3 Components: Actors, Activities, Resources - Elements: a. Strategy b. Culture c. Leadership d. Processes e. Tools f. Metrics