• Be competent in discussing the major concepts underpinning business level strategy

and applying these in business case settings.

• Be capable of applying a series of fundamental business strategy tools (including

industry analysis, competitive strategy and resource and capability tools) and

techniques to the formulation and analysis of value creation and capture at a strategic

level.

Porter 5 Force analysis

Porter framework assumes:

1. industry structure drives competitive behaviour

2. Industry structure is (fairly) stable.

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Case: Airline Industry ….
Porter’s 5 forces – purpose: Identifying the different stakeholders, or ‘forces’, which affect:

• The level of competition in an industry.

• The ability of a company to become powerful in that industry.

Threat of New Entrants :

• Company’s Point of view

• Industry Point of view

• Huge Capital Required

• High Maintenance Cost

• Brand Identity.

• Govt. Policy

Supplier’s Bargaining Power

• Aircraft Manufacturers

• Fuel Companies

Buyer’s Bargaining Power

• Travel Agents

• Business Travelers

Threat Of Substitute

• Railway service

• Bus service

• Water Transport

• Video conferences (for business flyers)

Competitive Rivalry

• Highly Competitive Industry.

• Can work as growth driver for Industry.

External Analysis: Porter’s Five Forces Threat of New Entrants HIGH Threat of Substitute Products MEDIUM Buyers’ Bargaining Power LOW Suppliers’ Bargaining Power LOW Industry Competitors Rivalry Among Existing Firms HIGH

Dynamic Competition

Competition changes industry structure:

– Schumpeterian Competition: A “perennial gale of creative destruction” –market leaders overthrown by innovation

– Hyper