Week 1 - Competitive Strategy
Porter:
Author Porter (1979)
Title How competitive forces shape strategy
Essence of strategy formulation is coping with competition.
Corporate strategist goal is to find a position where the company can
Main concept best defend against the forces and use them in their favour.
Key to growth is to find a position in the market that is less vulnerable
to competitors, buyers, suppliers, and substitutes.
Five forces:
1. Threat of entry-> The easier it is for companies to enter a new
market (time &money) the more an established company’s position
could be weakened.
2. Bargaining power of suppliers -> the easier it is for suppliers to
influence prices the harder it is for a firm to source for low costs
3. Bargaining power of costumers/buyers-> ability of costumers to
Important
drive the price lower.
constructs
4. Threats of substitutes-> substitute products availability limit the
potential of an industry as they place a ceiling on prices it can
charge.
5. Rivalry among existing competitors-> jockeying for positions with
different tactics. The number of competitors influences a firm’s
chance to succeed.
Based on these 5 forces you can determine how attractive an industry is
1. Strategist assesses the forces 2. Identifies strengths and weaknesses 3.
Draft a plan of action with the specific industry forces in mind. Find a
fit between S/W and of the company and the market / influence the
Approach to
balance of the forces / exploit industry change.
strategy
Strategy is coping with competition, finding a fit between a firm an its
environment. Strategies are generic positions in the market.
Positioning school.
Porter:
Author Porter (1979)
Title How competitive forces shape strategy
Essence of strategy formulation is coping with competition.
Corporate strategist goal is to find a position where the company can
Main concept best defend against the forces and use them in their favour.
Key to growth is to find a position in the market that is less vulnerable
to competitors, buyers, suppliers, and substitutes.
Five forces:
1. Threat of entry-> The easier it is for companies to enter a new
market (time &money) the more an established company’s position
could be weakened.
2. Bargaining power of suppliers -> the easier it is for suppliers to
influence prices the harder it is for a firm to source for low costs
3. Bargaining power of costumers/buyers-> ability of costumers to
Important
drive the price lower.
constructs
4. Threats of substitutes-> substitute products availability limit the
potential of an industry as they place a ceiling on prices it can
charge.
5. Rivalry among existing competitors-> jockeying for positions with
different tactics. The number of competitors influences a firm’s
chance to succeed.
Based on these 5 forces you can determine how attractive an industry is
1. Strategist assesses the forces 2. Identifies strengths and weaknesses 3.
Draft a plan of action with the specific industry forces in mind. Find a
fit between S/W and of the company and the market / influence the
Approach to
balance of the forces / exploit industry change.
strategy
Strategy is coping with competition, finding a fit between a firm an its
environment. Strategies are generic positions in the market.
Positioning school.
