(Solved Homework): What were 3 key insights you captured from Reading -The Five Competitive Forces that Shape Strategy?…

Porter’s 5 forces model could be used to scan the environment and eliminate the competition in the market by undertaking various theories such as Competitive Rivalry or Bargaining power of customers. Following are my three key in-sights:

A. Porter’s five forces model for competition analysis:

Porter believed in analysis of Five forces of Competition:

1. Threat of new entrants:

Can frighten off new entrants due to:

• Their need to enter on a large scale in order to be cost competitive

• The time it takes to move down the learning curve

1. Bargaining Power of Buyers:

Can mitigate buyer’s power by driving prices far below competitors that can cause an exit or shift power back to the firm.

1. Bargaining Power of Suppliers:

Can mitigate supplier’s power by being able to:

• Absorb cost increases due to low cost position
• Make large purchases, reducing chance of Supplier using power.

1. Threat of Substitute Products:

Well positioned relative to substitutes because:

• Make investments to create substitutes first
• Buy patents developed by Potential substitutes
• Lower prices to maintain Value Positions

1. Rivalry with existing competitors:

Can use Cost-leadership strategy to advantage since:

• Competitors avoid price wars with Cost leaders, creating higher profits for the entire industry.

B. The other technique that can be used is Michael Porter’s techniques are also Porter’s generic strategiesthat deal with:

–         Overall cost leadership

–         Differentiation

–         Focus

C. ENSURING OF COMPETITIVE EDGE IN THE MARKET:

–         The value chain analysis to be undertaken in order to ensure ways in which resources and competencies could add more value to our business functions.

–         The product differentiation by offering a distinctive product with unique pricing strategy could also help withstanding in the competition.