...Business Strategy 4 External Environment Prof. Dr. Bernd Venohr Berlin, April 2007 © 2007 Prof. Dr. Bernd Venohr Agenda Introduction to Strategy 1 2 3 4 5 6 7 8 9 Course Overview and Strategy Concept Economics of Strategy Shareholder Value External Environment Internal Environment Competitive Positioning Diversification Mergers & Acquisitions Global Strategy Business Strategy Corporate Strategy Strategy Process 10 Organizational Structure and Control 11 Strategic Leadership © 2007 Prof. Dr. Bernd Venohr 2 Agenda Introduction to Strategy 4 External Environment - General environment analysis - Industry analysis - Summary and Outlook next Session © 2007 Prof. Dr. Bernd Venohr 3 Where are we today? Introduction to Strategy 1 Course Overview Strategy Concept 2 Economics of Strategy 3 Business Strategy 4 External Environment Shareholder Value Corporate Strategy 7 8 Diversification Global Strategy 5 Internal Environment 6 Competitive Positioning Mergers & Acquisitions 9 Strategy Process 10 Organizational Structure and Control 11 Leadership © 2007 Prof. Dr. Bernd Venohr Strategic 4 General purpose of external analysis Identify Opportunities: conditions that may help firm achieve strategic competitiveness Threats: hinders or constrains firm’s pursuit of strategic competitiveness Two types of environment Macro environment Micro environment (industry) Source: Robert M. Grant...
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...implications as to what is means to be socially responsible. Michael Porter’s article “Creating Shared Value” looks at, “the connection between societal and economic progress” (Porter). The article written by Archie Carroll and Kareem Shabana titled, “The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice” looks at how social responsibility can provide “incentives from a primary corporate economic/financial perspective (Carroll).” This can all be tied together with the new emerging type of corporation, a B-corp. A B-corporation is concerned with the triple bottom line; people, planet, and profit. Many businesses are jumping on band wagon of social responsibility while others are standing back to evaluate the progress of this new idea. Is there any stock in what Michael Porter or Archie Carroll and Kareem Shabana are saying? Do their ideas conflict with one another or support each other? Do B-corporations fit into this idea of social responsibility? Michael Porter article looked at the things that businesses could do to create shared value. Shared value as Porter explains means long term sustainable business that benefits multiple stakeholders. Porter’s article focused on different ways to create this shared value. He looked at reconceiving products and markets. This could mean looking at the question, “Is this product good for our customers? Or for our customers’ customers (Porter)?” Porter wants people to look at how their products or services...
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...Michael Porter Michael Eugene Porter who was born on May 23 in 1947. He comes from Michigan. He is the Professor of Bishop William Lawrence University at The Institute for Strategy and Competitiveness, based inside Harvard Business School. He is a leading authority on competitive strategy and the competitiveness. Michael Porter's work is recognized in many governments, corporations and academic circles globally. Michael Porter's core field is competition and company strategy. He is mainly recognized as one of the intellectual leaders in his modern strategy field and his ideologies and theories are taught in practically every business school throughout the world. His work has also re-defined thinking about concepts such as competitiveness, economic development, economically distressed urban communities, environmental policy, and the role of corporations in society. His main academic objectives focus on how a firm or a region can build a competitive advantage and develop competitive strategy; the competitiveness of nations, regions and cities; and solutions to social problems. Porter has his 3 Generic strategies, which describe how a company pursues competitive advantage across a chosen market scope. These three generic strategies are, either lower cost, differentiated, or focus. Cost leadership, product differentiation, and focus are based on choices regarding competitive scope and competitive advantage. Firms position themselves by leveraging their strengths. Michael...
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...ANALYSIS OF MICHAEL PORTER’S GENERIC STRATEGIES AND ITS USAGE IN A GLOBALIZED BUSINESS ENVIRONMENT THESIS - BACHELOR HONOURS IN BUSINESS ADMINISTRATION DIANA MARIA CAMACHO ARIAS TYPE OF DOCUMENT: DISERTATION TO OBTAIN THE DEGREE OF BACHELOR HONOURS IN BUSINESS ADMINISTRATION APPROVED BY UNIVERSIDAD DEL ROSARIO – FACULTAD DE ADMINISTRACION INSTITUTION: ÉCOLE INTERNATIONALE DE MONTPELLIER FRANCE, MONTPELLIER, MAY OF 2009 ANALYSIS OF MICHAEL PORTER’S GENERIC STRATEGIES AND ITS USAGE IN A GLOBALIZED BUSINESS ENVIRONMENT THESIS - BACHELOR HONOURS IN BUSINESS ADMINISTRATION DIANA MARIA CAMACHO ARIAS TYPE OF DOCUMENT: DISERTATION TO OBTAIN THE DEGREE OF BACHELOR HONOURS IN BUSINESS ADMINISTRATION APPROVED BY UNIVERSIDAD DEL ROSARIO – FACULTAD DE ADMINISTRACION TUTOR: TIDIANE AW INSTITUTION: ÉCOLE INTERNATIONALE DE MONTPELLIER FRANCE, MONTPELLIER, MAY OF 2009 DEDICATION I dedicate this dissertation to every person that has allowed it to be possible with the critics, to the teachers and tutors that have awaked in me the interest in this topic and also the passion for the businesses strategy, to my family that has always supported me to achieve my goals and to develop myself as a human being and also as a professional, and finally but not less important to Gabriel that has been a huge support to bring this dissertation to a satisafactory end. ACKNOWLEDGEMENTS This thesis would not have been possible without the generous assistance of the following...
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...25 March 2016 Student Name: Simrat Pal Singh Student ID: TIZ00001KI Submitted To: Mariana Morrison Theory This porter five forces was introduced by Michel e porter who was from Harvard business school in 1979, [ (porter five forces , 2016) ] these are about to find what level of competition in the industry and how we can develop our business, Porter five forces give us analysis what is the competition in the market and how market is influence by this porter five forces and these five forces helps us to find the position of that factors which influences the market These five forces can forecast about what profit organisation can achieve and how much success it will get, [ (model of five forces , 2016) ] The porter five forces are as follows 1. Suppliers power = if the supplier want to reduce the profit of the organisation then supplies increases the prices of product , suppliers can also effect the availability & reduce the quality of the product , [ (supplier power, 2016) ] if there is monopoly created by supplier in the market that it’s major factor to effect the costs of product [ (poertersupplier buyer, 2016) ] 2. Buyers power = customer is king , [ (bargaining-power-of-buyers-porters-five-forces-model, 2016) ] a buyers can force to businessman to reduce their product price and give them a good customer service , as per porter five forces analysis customer [ (buyer power, 2016) ] have bargain power and customer can put competition in the...
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...Strategies was raised by Michael Porter which was used to hold across different kinds of business situations. Generic Competitive Strategy is the business strategies which achieve the stable and sustainable competitive advantage in long term (Ormanidhi & Stringa, 2008). Competitive strategies contain offensive and defensive actions to maintain stable position in the industry. It can also help the corporate outperforming the competitors in the industry with four competitive strategies (Tanwar, 2013). Parnell proposed the value and market control as the primary factor based on the Generic Competitive Strategy (Parnell, 2006). Generic Competitive Strategy included (1) Cost Leadership, (2) Differentiation, (3) Focus and (4) Stuck in the Middle(Porter, 1985). The cost leadership strategies and differentiation strategies are used for searching the competitive advantages in a broad range of industry, and cost focus and differentiation focus are used for achieving the scope of activities with competitive advantage in a narrow segment (Porter, 2008). Corporates are willing to take Generic Competitive Strategy for building up their competitive advantages to ensure the market position in the industry and achieve the effectiveness of the firms (Abdalla, 2015) 2.1.1) Cost Leadership Strategy Michael Porter mentioned that cost leadership is one of the strategies to have a broad range in industry which the sources of cost advantage depends on the structure of industry (Porter, 2008). This strategy...
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...Porters 5 forces that was developed by Michael Porter in 1979 focuses on 5 main factors that can help the FMCG companies and determine the industry that a company wants to join or enter into. The Porters 5 forces will show if it is profitable for a company to enter the market based in the 5 criteria’s. Porter’s main plan was to understand the forces and the underlying causes that reveals the basis or foundation in an industry’s profitability while allowing to identify the current and the future incoming competition (Arline, 2015). According to Michael E. Porter the origin of profitability will not change regardless of the type of the industry that a company will operate in. But what will drive competition and the profit making ability will be structure of the industry, and not the fact that the industry is producing goods or services, is developing or matured in the market. Porters 5 Forces Model Source: (Masonmyers.com, 2016) Applying the porter’s five forces into Fmcg companies. Threat of new entrants. Coca cola is a well-known beverage company that falls into the FMCG category. They aren’t just a company but also hold a very strong brand name. Coca cola faces a medium risk of new entrants. They reap economies of scale and thus enjoy very low average cost making it hard for new entrants to enter the beverage market. And also the fact that Coca cola has been operating in the market for a very long time, their products are popular around the world in almost every country...
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...Yabyabin, Jed Cedric A. Reflection Paper: What Is Strategy? K36 What makes strategy different from operational effectiveness (OE)? Is OE necessary to effective strategy formulation and implementation? Why? Porter (1996) describes strategy as the creation of unique and valuable positioning that requires a set of different activities to make competitive trade-offs and strategic fit that creates competitive advantage and superior profitability. Operational effectiveness, on the other hand, refers to performing similar activities better than the rivals through benchmarking and incorporating best industry practices (Michael E. Porter, 1996). Porter (1996) discusses that strategy aims to position the company in performing different activities from its competitors or perform similar operational activities in different ways; whereas operational effectiveness presents how the company compares, acquires, and improves similar operational functions of its competitors. Although operational effectiveness may have its benefits of building efficiency and productivity, it is insufficient and unnecessary to the formulation and implementation of strategy. This is because it drives competitive convergence (Michael E. Porter, 1996) that makes the company homogenous to the other companies in the same playing field for incorporating same operational activities (despite making them “better”). With this, competitors can and may imitate certain management practices, technologies...
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...Stages of the Research Process Student’s Name Institution Stages of the Research Process Many people engage in research practices with the motive of analyzing given problems in the society while others do it for study purposes. In the field of business and investment, researchers and scholars conduct studies with the aim of promoting investment and ensuring there is a favorable investing climate in the future. The paper will evaluate two pear reviewed articles conducted on the field of business. The first article is strategy written by David, Gary, and Amy in 1997 in Strategic Management Journal. The second one is strategic planning by Michael E Porter. It was published in 1996 in Harvard Business Review. The paper will analyze the research to evaluate the research process considering application of the literature review, ethical consideration and statistical analysis significance. The paper will also analyze the conclusion to determine the effectiveness of the study. When writing any research, there are some critical steps that an individual have to remember. The first critical step is to identify the objectives of the study. Each study has defined objectives that guide the researcher. The objectives enable the researcher to stick to the topic and avoid collecting irrelevant data. In the above articles, the researcher begins with outlining the objective of the studies before introducing the research question. It enables the reader to understand the aim of the study through...
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...Introduction A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus. Michael Porter suggested that businesses can secure a sustainable competitive advantage by adopting one of three generic strategies. According to Michael E. Porter's description of the five forces of competition, companies can raise their profitability by placing their activities...
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...Competitive Advantage Creating and Sustaining Superior Performance Author: Michael E. Porter Michael E. Porter's Competitive Advantage explores the underpinnings of competitive advantage in the individual firm. Porter's groundbreaking concept of the value chain disaggregates a company into "activities," or the discrete functions or processes that represent the elemental building blocks of competitive advantage. Giving readers a comprehensive understanding of business strategy and how to create a sustainable competitive advantage for their organization, Porter explores how a firm can put the generic strategies of cost leadership, differentiation and focus into practice. This essay will explore Competitive Advantage and the underlining theory that to compete in any industry, companies must perform a wide array of discrete activities that are narrower than traditional functions. It will analyze the real core of the book which is to determine whether companies profit from creating value for customers, or whether that value is competed away. INTRODUCTION “Competitive Advantage is at the heart of a firm’s performance in competitive markets. After several decades of vigorous expansion and prosperity, however, many firms lost sight of competitive advantage in their scramble for growth and pursuit of diversification. Today the importance of competitive advantage could hardly be greater. Firms throughout the world face slower growth as well as domestic and...
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...Anne Muriithi 05/08/15 Executive Summary: Whole Food Market, Inc. Whole Food Market, Inc. was founded by John Mackey in 1980 in Austin Texas. Initially, John began with one store and hired nineteen employees. Overtime, Whole Food Market Inc. has been able to expand and has become a leading grocery store chain that sells natural and organically grown produce in the United States and overseas. Whole Food Market, Inc. mission, culture and values are as follows: Mission: “We believe that companies, like individuals, must assume their share of responsibility as tenants of Planet Earth. We actively support organic farming, the best method of promoting sustainable agriculture and protecting farm workers and the environment. We also aim to protect the environment by supporting alternative sources of energy and by recycling or composting our waste. We are actively involved in our communities by supporting food banks, sponsoring neighborhood events, and contributing at least 5 % of total net profits to not- for profit organizations. Our vision of a sustainable future means our children and grandchildren will be living in a world of that values human, creativity, diversity, and individual choice. Our whole business is about making a difference- in the lives of our team members and the customers we serve, and in the communities and environments that we operate. Our Philosophy is to satisfy and delight our customers- and to support team member’s happiness and...
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...Duan Xinxin, Han Han, Gongjiangbo, Wuchao, Liang Haigang Date:18th April 2016 TABLE OF CONTENTS 1 Abstract 1 2 Introduction 1 2.1Background 1 2.2 Challenges 1 3 Analysis 2 3.1 Bargaining power of suppliers 3 3.2 Bargaining power of buyers 4 3.3 Internal problems of CRRC 4 4 Recommendation 4 4.1 Solution to decrease the power of Knorr 4 4.2 Solution to decrease the power of customers 6 4.3 Solution to improve myself 6 5 Conclusion 6 Reference 7 How to get along with the dominant supplier—KNORR-BREMSE 1 Abstract In the report, the background of CRRC is introduced and 3 challenges are presented when CRRC gets along with the dominant supplier--KNORR-BREMSE, then 3 challenges are analyzed using Five Forces model of Michael Porter, finally solutions to the 3 challenges are proposed. 2 Introduction 2.1Background The CRRC is the world's largest supplier of rail transit equipment with the most complete product lines and leading technologies. Its main businesses cover the R&D, design, manufacture, repair, sale, lease and technical services for railway rolling stock, EMUs, urban rail transit vehicles, engineering machinery, all types of electrical equipment, electronic equipment and parts, electric products and environmental protection equipment, consulting services, industrial investment and management, asset management, import and export. Its products have been exported to around 100 countries and regions in 6 continents. The export of products has also been...
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... MICHAEL PORTER: Well, the problem is I think we've gotten into a very vicious cycle in thinking about the relationship between business and society. And really, the purpose of capitalism, and the benefits of the capitalist system to society, and to meeting society's needs-- needs like improving people's lives, and improving the health of communities. We've gotten into a cycle where, I think, business has evolved and thinking about business management has evolved, in a direction that we've narrowed the scope of how you create economic value. And increasingly, companies are being perceived as creating profit at the expense of the community, not creating profit that actually ultimately benefits the communities. As a result of this, I think government has increasingly seen business as a problem, as a source of bad things in society. And the mindset is becoming increasingly to regulate, to control, to tax. And ultimately, now often political leaders are unable to pursue business-friendly public policies, because the political environment almost forces them to be tough on business. Despite the fact that we know at some deep level, business and society need each other. But we've kind of gotten ourselves into a bad place. ADI IGNATIUS: But, I think a lot of business people would argue, what we do is run businesses, and we make profits. And when we're successful we hire people. And that's all we can do. To have an agenda beyond that is really outside of our scope. MICHAEL PORTER:...
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...than its competitors. Strategic management. It is the systematic analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for maintaining optimum management practices. The objective of strategic management is to achieve better alignment of corporate policies and strategic priorities. Porter’s generic strategies. These are three general types of strategies developed by Michael Porter that are commonly used by businesses to achieve and maintain competitive advantage. Company. It is a voluntary association formed and organized to carry on a business. Types of companies include sole proprietorship, partnership, limited liability, corporation, and public limited company. INTRODUCTION The concept of competitive advantage is central to the study of strategic management, since a company or an organization must follow an aligned strategy to outperform their rivals in the industry. Michael Porter introduces three generic strategies that a firm may apply in order to do so they include; overall cost leadership, Differentiation and Focus. In order to create and sustain competitive advantage, companies should analyse the value chains of their customers and suppliers to see where they can add value. Competitive advantage Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors...
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