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Porter’s Five Force

Porter’s Five Force

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Please review Chapter 4’s section concerning Porter’s 5 Forces, read the Forbes article Porter or Mintzberg: Whose View of Strategy Is the Most Relevant Today? (Links to an external site.) (Moore, 2011) and view the required You Tube video Five Competitive Forces That Shape Strategy (Links to an external site.), regarding Porter’s five forces. In the video, Mr. Porter discusses how Porter’s Five Forces Analysis is an important tool for assessing the potential for profitability in an industry. As an example, Mr. Porter applied these five forces to the airline industry. Think of another industry where profitability is low. In an initial post of at least 250 words, apply the five forces to your chosen industry and demonstrate how those forces can lower profitability.

WEEKLY LECTURE:

Strategic Issues

In week two, we learned about how to conduct industry, organizational and market analyses. We were also exposed to the examination of organizational performance, where we learned about the SWOT analysis. In this week, we will explore key issues that organizations face and the possible best alternatives they should adopt to solve their issues.

Strategic issues may be defined as fundamental policies or serious challenges, which must be addressed for an organization to be able to accomplish or achieve its vision. According to (Kader, 2014), strategic management involves managing businesses and projects proactively with a “focus on long-term strategy, rather than reacting to day-to-day hiccups” (p.1). In your opinion, and based on your work experience, what are the itching issues that companies may face? What are the possible solutions that you would recommend to your organization? No company or organization is above strategic issues. Multinationals such as Microsoft were once faced with multiple issues such as improving standing as an innovator and navigating the new internal politics (Bishop, 2014). If left unchecked, strategic issues ruin the progress of an organization through loss of market share, profit margin, and even destruction of the brand.

Identifying strategic issues of an organization is pivotal to delivering the company from potential disaster. According to Abraham (2012), strategic planning may come from both external and internal sources. External issues may include company’s industry, competitors, customers, suppliers, opportunities and threats, and other environmental forces; while the internal strategic issues may be identified as key orga­nizational resources, culture, technology, or strategic decisions that the company must address. It is difficult to deal with strategic issues without discussing the concept of strategic planning. It is an important concept to the success of any business.

Strategic Planning Cycle BUS402 Weekly Lecture 3 image

Source: http://patimes.org/static-dynamic-choice/strategic-plan-cycle/ (Links to an external site.)

Strategic planning defines the objectives of an organization and evaluates the internal and external situation in order to formulate the strategy, implement the strategy, evaluate the progress of the organization and make necessary adjustments to remain on the right path. Once the strategic planning is done, presenting the gathered information is really important. To learn about some tips for preparing a strategic-analysis presentation, check the following link: Tips for Preparing a Strategic-Analysis Presentation (Links to an external site.). Here is another interesting Forbes article that explains what really needs to be included in a strategic plan: Strategic Plan Template: What to Include in Yours (Links to an external site.).

Creating the best strategic planning and strategic alternatives are major challenges to management. It is, therefore, important for management to often be engaged in strategic conversations concerning their organizations. According to Abraham (2012, p.188) “strategic alternatives did not consist solely of strategies but rather bundles.” He adds that strategic-alternative bundles may include “strategies, strategic intent, core competence, programs (which are an operational component of a strategy), financing method, geographic scope, and any other element that would help define and clarify a future course of action to an observer” (2012, p.188). It is crucial for organizations to create worthy bundles and to do so they have to look for six criteria to meet when it comes to creating strategic-alternative bundles: “be mutually exclusive (involve either/or decisions); contain significant variety; be feasible; lead to success; challenge the organization’s existing goals, aspirations, long-held assumptions, and beliefs; and have addressed all the strategic issues)” (Abraham, 2012, p.198).

When Starbucks realized dwindling sales in the United Sates market, due to market saturation, it decided to explore foreign markets (Allison, 2010). In order to be successful in the international market, it developed none-coffee products such as Frappuccino. Frappuccino was developed with one aim in mind–to satisfy the needs of non-coffee drinking customers worldwide. The result of this alternative strategy was outstanding; the company enjoyed a higher sale and profit margin.

Choosing the Best Business Strategy

Identifying strategic issues and creating alternatives paves ways to the selection of the appropriate criteria for solving the organization’s potential problems. In this ever-changing business environment, choosing the best alternative would enable the organization to adapt to these changes. Which alternative would give your organization the highest market share, or technological competitiveness? Your choice must be relevant to your organization’s situations. It is necessary for management to have a brainstorm session in order to select the best alternative suitable to solve the organization’s strategic issues.

But, no matter how well they do on choosing the best strategy, it is always a great idea to consider what could potentially go wrong in the future and plan some actions to properly face it. This is called contingency planning for triggers. Great managers and successful organizations have learned to be proactive by developing well-prepared contingency plans for their organizations. Good contingencies should meet three criteria; Abraham (2012) explains that first, contingencies should not renege on the adopted best strategy or strategic bundle. They should more focus on the operational changes rather than trying to modify the strategy. Second, managers should avoid making contingency as something the company is already doing. It is simply because if it was successful at the first place, it wouldn’t put the company in this situation. Last, the contingency should address the problem implied in the trigger and not something that is indirectly related to the trigger. To learn more about risk assessment, contingency planning, and its challenges read Contingency Planning: Developing a Good ‘Plan B’ (Links to an external site.).

References:

Abraham, S. C. (2012). Strategic management for organizations. Retrieved from https://content.ashford.edu/

Allison, M. (2010, May 15). Starbucks has a new growth strategy–more revenue with lower costs (Links to an external site.). The Seattle Times. Retrieved from http://seattletimes.com/html/businesstechnology/20…

Bishop, T. (2014, February 5). The top 5 challenges facing Microsoft CEO Satya Nadella (Links to an external site.). Retrieved from http://www.geekwire.com/2014/top-5-challenges-faci…

Kader, M. (n.d.). Strategic management (Links to an external site.). Retrieved from https://www.open2study.com/courses/strategic-manag…

Lavinsky, D. (2013, October 18). Strategic plan template: What to include in yours (Links to an external site.). Retrieved from http://www.forbes.com/sites/davelavinsky/2013/10/1…

Mind Tools Editorial Team. (n.d.). Contingency planning: Developing a good ‘plan b’ (Links to an external site.). Retrieved from https://www.mindtools.com/pages/article/newLDR_51….

Tips for preparing a strategic-analysis presentation (Links to an external site.). (2011). Retrieved from http://www.emeraldgrouppublishing.com/promo/strate…

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