Marketing Strategy Management
Ghulam Hassan L1S15MBAM0125
Prof. Waseem Irshad
April 27, 2015
Write down a Summary of the case study “the five competitive forces that shape strategy” by Michel E. Porter
Summary of the Case
The article is about Porter five forces model and it’s related information. We will summarize each topic by separate heading:
The Idea in brief:
In Order to get maximum profitability, a business owner / financial manager should responds very strategically on competition and naturally they look at their direct competitors only. But in real arena, as porter explain in its article …show more content…
Managers define competition too narrowly as it occurred only among direct competition. Yet competition between rivals include four other competitive forces as well incudes customers, suppliers, new entrants and substitute products. These forces define industry’s structure and shapes the nature of competition within an industry. If the forces are strong / high, like airline industry, no company earns attractive returns on investments. If the forces are low / weak, like soft drink industry, many companies earns attractive returns on investments.
So, understanding of these forces reveals the roots and causes of profitability and competition overtime in an industry.
Forces That Shape Competition:
The configuration of five forces are differ by each industry. Industry structure grows out of a set of economic and technical characteristic that determine the strength of each competitive force. We will summarize each force below:
Threat of …show more content…
Implication of Strategy:
Understanding of forces that shape industry competition is starting point of developing strategy. This provide baseline for sizing up a company strengths and weaknesses. The best strategies exploit more than one of these possibilities:
Positioning the company: strategy can be view as finding a position in the industry where the force are weaker.
Exploiting and anticipating industry change: brings opportunity to spot and claim new strategic position.
Shaping the industry structure: by use tactics that are designed specifically to reduce the share of profits leaking to other competitors.
Competition & Value:
In a world of more open competition and relentless change, it is more important than ever to think structurally about competition. Understanding industry structure is equally important for investors as for managers. The ﬁve competitive forces reveal whether an industry is truly attractive, and they help investors anticipate positive or negative shifts and allows to take advantage of undue pessimism or