...The Five Competitive Forces That Shape Strategy In order for a company to understand the structure of its industry, awareness of the five forces can help. The first force is the Threat of Entry, where new entrants to an industry bring new capacity and a desire to gain market share that put pressure on prices, cost and rate of investment necessary to compete. New entrants shake up competition, where when threat is high, incumbents must either hold down prices or boost investment. The second force is the Power of Suppliers, where powerful suppliers capture more of the value for themselves by charging higher prices, limiting quality or services or shifting cost to industry participants. The power of suppliers can squeeze profitability out of an industry that is unable to pass on cost increases in its own prices. Third is the Power of Buyers, where powerful customers can capture more value by forcing down prices, demanding better quality or more service. Powerful customers play industry participants off against each other which challenges their profitability. Fourth is the Threat of Substitutes, where substitutes perform the same or similar functions as an industry’s product by a different means. When threat of substitutes is high, industry profitability and growth potential suffers. Last is the Rivalry among Existing Competitors, where high rivalry limits the profitability of an industry but rivalry depends on the intensity with which the companies compete and the basis of which...
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...FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS Coursework: BBMF3023 Corporate Treasury Management Programme: Bachelor of Business (Honours) Accounting and Finance Academic Year: 2016/2017 Group coursework Corporations must strike a balance between current dividends and future growth which maximise the price of stock. Discuss the corporate dividend policy. You are required to include a public company listed in Bursa Malaysia and determine is there any obvious pattern to the dividend decision? Notes to Students 1. For the Group Coursework, the maximum is 5-6 students to a group. 2. The approximate length for the Group coursework should be around 3,000 words. Report in excess of 10% of the required words will be penalized. Include the word count at the end of report. Students are to use Harvard referencing in this assignment. 3. The coursework should be type written using Times New Roman font (size 12) with line spacing of 1.5. Use simple binding and no need for plastic cover. 4. Students are to submit a Group Member Appraisal form to ensure total participation of each member and a plagiarism statement. It is compulsory to submit your assignments to Safeassign. 5. Be mindful of plagiarism. Referencing and bibliography are expected if any part of your assignment is borrowed from any particular source. You may be penalized for non-referencing to the source. Please fill up plagiarism statement form and attach it with your report. ...
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...Rauchenberger Five Forces Industry Analysis Michael Porter explains in detail the largest factors influencing profitability in any industry in the article The Five Competitive Forces that Shape Strategy and gives his opinion on what to do once they are identified. These five factors can be evaluated with respect to the Personal Computer (PC) industry based off of a 2012 case study of Apple Inc. Rivalry among existing competitors, the first and most obvious of the five competitive forces, is a strong force in the PC industry with great impact on profitability. Rivalry is high because the competition in the computer industry is very intense among very few serious competitors. The top four PC vendors (Hewlett-Packard, Dell, Lenovo, and Acer) accounted for 53.6% of worldwide shipments in 2011. Leadership in the industry has shifted numerous times, leading to slight differentiation and price competition by each company in an attempt to get ahead. Threat of new entrants is a weak competitive force for the PC industry. The presence of the four existing dominant players and significant barriers to entry deter new competitors from seriously entering the market. A new company would need to heavily invest in research and development and quickly generate brand recognition, and therefore would be unlikely to cause a large threat. Bargaining power of buyers Michael Porter explains in detail the largest factors influencing profitability in any industry in the article The Five Competitive...
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...University College Information Systems in Organizations (IFSM 300) UMUC Haircuts Stage One This report is based on gaining intellectual technology knowledge from a business standpoint. The Porters 5 Forces Analysis will be used as the beginning stage into this continuing project. UMUC Haircuts will be used as the background story to gain real world experience through creating solutions around Porters 5 Forces Analysis. This report is written in stages with gradual information given as is required. Stage II, minimally explains the forces, how they are relevant to the UMUC Haircuts, Impact and whether or not it will impact the strategy. Porters Five Forces are: Buyer Power, Supplier Power, Threat of Substitute Products or Services, Threat of New Entrants, and Rivalry among Existing Competitors. Buyer Power is the force that the buyer has on a product. UMUC Haircuts will want to bring in the most amounts of customers to gain the financial footstep in the Haircut industry. This is a positive impact and can affect the strategy. Supplier Power is big in the Haircut industry, especially as it pertains to personal hygiene. This is a positive impact and will affect the strategy. The threat of Substitutes in this industry is high with a neutral impact and does not affect the strategy. Generally, people who cut other peoples hair are personal friends or a fad and there is always months of opportunities where substitutes are not an option such as during Prom or special occasions...
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...Porter's Five Forces Model Porter's five forces analysis is the structure framework for industry analysis and business strategy development. (Porter, M.E. 2008) Using Porter's five forces analysis is a way to figure out the different firms competition levels and force of said "attractiveness" of a market. "Attractiveness" being used in the context of the end all, be all of a industry's profitability. On the other hand, an unattractive industry refers to the combination of all five of the forces acting to drive down the overall profitability. (Porter, M.E. 2008) Three of the five forces of Porters refer to the competition derived from external sources, the remaining two are both internal threats. Porter looked at the forces as the micro environment, that way it would highly contrast against the more commonly known term "macro environment". These forces are close the company and greatly affect the company's ability to serves its customers and make a profit also. If a change were to occur it will normally result in a business having to re-evaluate and re-asses the marketplace to see what overall changes in the company would have to be made to keep up with the market. This however, does not go to say that every firm or company will have the same amount of profit. A company with clear objectives is more likely to achieve a profit over a company with less clear objectives. It comes down to the company's core competences and how the company comes together to work together...
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...Article review - the 5 forces that shape strategy The article “The five forces that shape strategy” is written by Michael E. Porter. The article focuses on the “awareness of the five forces” (Porter, 78), the writer believes that it “can help a company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack” (Porter, 78). His objective is to provide the readers with a more in depth perspective of the framework of the “five forces”. In this article, Porter emphasizes on the framework of five forces namely: rivalry among existing competitors, threat of new entrants, threat of substitute products or services, bargaining power of buyers, and bargaining power of suppliers. We can refer the first there are as external sources, and the other two as internal sources. We can also think of the external and internal sources as micro and macro environments. The framework of the five forces collects massive different factors and put them into one simple model. Porter uses this framework as his base when analyzing an industry’s basic competitive situation. I think that Porter tries to tell the readers that of one wants to propose a feasible strategy, one should first confirm and analyze these five forces. Porter also addressed that each profession or each enterprise more or less must has to deal with the threat which the above each forces constitutes. According to the article “a company strategist who understands...
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...Five Forces Analysis on Competitive Forces Confronting Under Armour, Nike and Addidas Student Name University Affiliation Date Five Forces Analysis on Competitive Forces Confronting Under Armour, Nike and Addidas Under Armour, Nike and Addidas are leading manufacturer of footwear and sports accessories for children, men and women. This products are worn by athletes and persons with active lifestyles. Moreover, their products are sold in nearly all parts of the world with majority sales coming from North America. This paper Analysis five forces confronting Under Armour Nike and Addidas: superior supplier bargaining power, substitutes, new entrants, competition from existing producers and customer bargaining power. Superior supplier bargaining power is a common competitive force among the three companies. Though it is presumed that the three companies get their raw materials from several suppliers, and that supplier power is low. Suppliers form cartels and groups that help them negotiate higher prices for their supplies (Porter, 1979). Companies lack strength, to negotiate back, limiting their options and buy supplies at high prices which is common with Under Armor, Addidas and Nike. Substitutes are products that can be used in place of another product, they offer customers a wide variety of choices and can switch from one product to another with ease. This force offers a challenge among the three companies as customers choose...
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...Porter’s Five Forces in the Robotics Industry Iryna Varniaga University of Maryland University College Fall 2013 Turnitin score: 25% Porter’s Five Forces in the Robotics Industry “Porter’s five forces”: Introduction. “Porter’s five forces” is widely applied in today’s business world. Harvard Professor Michael E. Porter’s first HBR article “How competitive forces shape strategy” was published in 1979. It became revolutionary in the field of strategy. Porter’s subsequent work has brought big changes to the study of competitive strategy for corporations, regions, and nations. With assistance from his colleagues from Harvard Business School, Porter continues to update and extend his classic work, providing practical guidance for users of the framework (Porter 2008, Editor’s Note). According to Porter, dealing with competition is the main task of the strategist. But managers often think of competition too narrowly. Instead of considering just the current competitors, Porter suggested including four other competitive forces as well. They are customers, suppliers, potential entrants, and substitute products. All these five forces result in extended rivalry that defines an industry structure and the nature of competition within an industry. Although the configuration of five forces differs by industry, the underlying drivers of profitability are the same. The strongest competitive forces define the profitability of an industry and are very important to strategy formulation...
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...for HBR, "How Competitive Forces Shape Strategy." In the years that followed, Michael Porter's explication of the five forces that determine the long-run profitability of any industry has shaped a generation of academic research and business practice. In this article, Porter undertakes a thorough reaffirmation and extension of his classic work of strategy formulation, which includes substantial new sections showing how to put the five forces analysis into practice. The five forces govern the profit structure of an industry by determining how the economic value it creates is apportioned. That value may be drained away through the rivalry among existing competitors, of course, but it can also be bargained away through the power of suppliers or the power of customers or be constrained by the threat of new entrants or the threat of substitutes. Strategy can be viewed as building defenses against the competitive forces or as finding a position in an industry where the forces are weaker. Changes in the strength of the forces signal changes in the competitive landscape critical to ongoing strategy formulation. In exploring the implications of the five forces framework, Porter explains why a fast-growing industry is not always a profitable one, how eliminating today's competitors through mergers and acquisitions can reduce an industry's profit potential, how government policies play a role by changing the relative strength of the forces, and how to use the forces to understand complements...
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...Five Competitive Forces Analysis in the Insurance Industry RichardSmith Managerial Economics December 6, 2013 Industry Insurance is something that is needed by everyone today. It is used by individuals, business, corporations, etc. to help mitigate or minimize their financial risk. Various types of insurance exist today, from home, health, life, auto, travelers, indemnity, boat, renters, and even pet. Competition between insurance carriers is very stiff. In fact, in the United Kingdom (UK), the competition is so stringent, they have created a Competition Commission (CC), which is designed to ensure healthy competition between insurance companies in the UK for the ultimate benefit of the consumers and the economy ("Competition Commission GOV.UK."01). Many insurance companies have gotten caught up in having an unbalanced pool of insurers because they were not prepared and did not do their homework. The have to be very careful in their underwriting process to ensure they insure the most desirable individuals. Many insurance companies have learned quickly the value in the knowledge and power of information obtained from doing research and the huge financial risk associated with getting stuck with a poor unbalanced pool of insured. Therefore, many insurance companies today are utilizing various tools and setting themselves apart from the competition via the competitive forces in an effort to avoid the financial repercussions associated with not being prepared. That way...
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...“The Five Competitive Forces that Shape Strategy” Airlines from the years 1992 – 2006 had a profitably of 5.9% compared to average industry with in the united states of 14.9% in this same time period. This can be attributed to the high fixed costs of this industry for example salaries, gate fees, and jet fuel. This industry can be very price sensitive on what to charge for a tickets since there are so many airlines to choose from, and alternatives to flying, like driving yourself, taking a train or bus. For an airline to be profitable I believe an it should focus on being the best at a particular market of air travel and not try to be the airline for everyone. If an airline wants to be a leader in business travel they should focus on that and try to provide more non-stop flights to their destinations as business travelers need to get from point A to point B on time. If the airline can build brand loyalty in this sector by proving they are consistently on time they could be the airline of choice for business travelers. I believe an airline should also try to keep their fleet to one type of jet. This will make it easier for their mechanics to work on these jets and keep their fleets in the air. One of the forces that can prevent this is the power of the suppliers as there are only a few suppliers of these jets and it also takes these suppliers a significant amount of time to produce them. Porter, M. (2008). "The Five Competitive Forces That Shape Strategy." Harvard...
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...dynamic global environment. In this course, students are introduced to these challenges as they explore the tools and processes needed to accurately assess the political, legal, technological, competitive, and cultural factors that affect a firm’s strategies and operations within international and cross-cultural contexts. Integrative case studies are used to familiarize students with the challenging strategic decisions that global companies face as they work to ensure sustainable competitive advantage. Emphasis is placed on how the variable of culture interacts wth other national and international factors that affect managerial procesess and behaviors. This course also focuses on effective strategic, organizational, and interpersonal management as students learn how to develop the skills necessary to design and implement global strategies, conduct effective cross-national interactions, and manage daily operations in foreign subsidiaries. The growing competitive influence of technology is also discussed throughout the course. Prerequisites KG 592 Foundations of Business Management and Marketing Learning Objectives Students who successfully complete this course should be able to: 1. Use Porter's Five Forces Model to analyze specific domestic and international industries (Assessed by: BPP-Industry Analysis paper). 2. Analyze (compare/contrast) the effects of political, economic, legal and social dimensions on the global managerial challenges (Assessed...
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...Introduction This case study highlights Apple Inc. position on the consumer electronics retail within the United Kingdom’s market. The competitive conditions are highlighted using Porter’s five forces theory. The second part of this case study shows how Apple Inc handles the different forces and threat to remain competitive on the market. Porter’s five forces The Porters five forces is a model helping to analyse the forces that shape an industry’s competitive environment. The tool can be used to define the attractiveness of an industry as well as plan the strategy of a company within a market. Competitive rivalry within the industry The main actors of the consumer electronic goods are divided depending of the type of products their providing. Based on Apple’s product, we can identify the following competition’s group: * Computers: Lenovo, HP, Acer, LG, Fujitsu, etc. * Smartphones: Samsung, HTC, Sony Ericsson, LG, Nokia, Blackberry, etc. * Music players: HP, Samsung, etc. * Tablets: Samsung, Tesco, Acer, Microsoft, Blackberry, etc. The competitive rivalry is intense within the consumer electronic goods retail. Entering this market as a new brand is very difficult as the current actors are well settle. Also many companies having a step in the market are diversifying their type of electronic products, and each of them is a potential competitor for any other brand. Bargaining power of buyers The buyers have the opportunity to compare the products prices using...
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...Competitive Forces ITM 524 - Foundations of Information Technology Management Module 2 – Case 1 Trident University International January 4, 2016 Value Chain and Competitive Forces The value that an organization creates and acquires is referred to as the profit margin. This means that the more value the organization creates the more profitable the it has a chance of becoming. In order for an organization to remain profitable, they must develop a competitive strategy. Michael Porter developed the concept of the “value chain,” which is a “set of activities that an organization carries out to create value for its customers (Porter's Value Chain, 2015).” The Five Forces The five forces model was developed by Michael E. Porter to help organizations evaluate the quality of a particular industry’s competitiveness and develop business strategies accordingly. The five forces are supplier power, buyer power, competitive rivalry, threat of substitution, and threat of new entry (Porter, 2008). Supplier Power With supplier power an organization determines how easy it is for suppliers to drive up prices. This is determined by the number of suppliers of each key input, the exclusivity of their product or service, their strength and control over the business, the cost of transferring from one to another, and etc. The scarcer the supplier choices an organization has, and the more the need for suppliers' help, the more powerful the suppliers become (Porter’s Five Forces, 2015)...
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...analysis? 7. What industry definition approach is especially useful for analyzing an industry in a regional markets or for analyzing new or emerging industries? 8. What is the objective of reviewing an industry's history? 9. What is the problem with only looking at the past five years of industry events and history? 10. What is a common framework for examining macro-environmental factors? 11. What is the first step in analyzing resource availability? 12. In a strategic industry analysis, why do managers need to be especially sensitive to customer needs and actions? 13. What is the final step in analyzing industry forces? 14. What competitors should managers be very aware of and knowledgeable about? 15. How does an oligopoly industry structure differ from monopolistic competition? 16. What is the purpose of evaluating successful and unsuccessful firms in the target industry? 17. What is a strategic group map? 18. What are examples of competitive strategy dimensions that are generally useful in constructing a strategic group map? 19....
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