2nd BGU. Strategy- Definition - 5 Forces Model

 https://www.youtube.com/watch?v=0yHwUp87xcI&ab_channel=CommuterLearningTV

  

What is Business Strategy

To be clear, professionals think about strategy in different ways, so there isn’t a single clear definition of strategy. However, Michael Porter defines strategy as a competitive position, “deliberately choosing a different set of activities to deliver a unique mix of value.” In other words, you need to understand your competitors and the market you’ve chosen to determine how your business should react.


Michael Porter and the industrial organisation paradigm

After relabelling the field ‘strategic management’ in the late 1970s, the  focus moved towards industrial organisation economics in both theory and  method. At this time research was aiming to develop and test hypotheses  derived from the structure-conduct-performance (SCP) paradigm. The  basic idea of this paradigm is that the performance of a firm is determined by the industry in which it competes. The conduct of a firm is just a  reflection of the industry structure, so that the most important decision  a firm has to make is in which industry it wants to compete in. The SCP  paradigm led to a shift in focus from the firm to the industry or market structure. The most influential scholar from this era is Michael Porter, who  is not only well known among researchers but also among practitioners.  He developed the so- called ‘five forces’ model that specified different  features of an industry and which determines its attractiveness and  facilitates competitor analysis. Porter also proposed the idea of generic strategies – low cost leadership, differentiation and focus – to match the characteristics of industry and achieve a competitive advantage.

Besides the SCP paradigm, research at this time developed the idea of strategic groups. Strategic groups are groups of firms in the same industry who follow the same strategy, for example, all suitcase producers in the high-price market like Louis Vuitton or Bottega Veneta. 

A third important research theme, influenced by industrial organisation economics, is competitive dynamics.The basic interest of competitive dynamics is to investigate how firms are jostling for competitive advantage by carrying out different types of strategic and tactical actions.

Example from Tesla Vehicles
https://www.youtube.com/watch?v=5F0dI8zaotU&ab_channel=LearntoInvest}

Porter's 5 Forces

Porter's Five Forces is a framework for analyzing a company's competitive environment.
The number and power of a company's competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company's profitability.
Five Forces analysis can be used to guide business strategy to increase competitive advantage.

https://www.youtube.com/watch?v=XCWHSeDU-zk&ab_channel=HarvardBusinessReview

Porter Five Forces Exercise

Consider a new product or service that your company is looking to develop and launch. Use Porter’s model to help understand forces in your environment and to help understand the potential return (if any) on a new product or service.

1. Threat of entry of new competitors:

2. Bargaining power of suppliers:

3. Threat of substitute products or services:

4. Bargaining power of customers:

5. Rivalry among existing firms in the industry:

 




Homework: Consultation about Static and Dynamics Games


Comments

Post a Comment

Popular posts from this blog

1st Bac - The Entrepreneurship Ecosystem

Image
  https://youtu.be/mW6dGqp4YYQ The entrepreneurship ecosystem 1. What is an entrepreneurship ecosystem? 2. Stability 3. Activity  4. Entrepreneurs 1. What is an entrepreneurship ecosystem? An entrepreneurship ecosystem is an economic, social, and cultural environment comprising multiple stakeholders involved in or benefitting from concentrated activities related to entrepreneurship. These stakeholders are individuals, organizations and institutions across the private and the public sector such as entrepreneurs, investors, government, military, aid agencies, universities, research centres, professional services firms, local communities, and many more. The activities carried out by the stakeholders are largely geared towards facilitating entrepreneurship in a wider sense. Although these activities are not following a concerted approach they are interrelated. Entrepreneurs and investors represent the nucleus of an entrepreneurship ecosystem around which everything revolves. 2. St...
Read more

2nd Bac Socialism and Free Enterprise

Image
  Socialism and Free Enterprise https://www.youtube.com/watch?v=7NRnOpLpwyY&ab_channel=PolicyEd https://www.youtube.com/watch?v=4opFbB6okwo&ab_channel=EvanThomas According to an old joke that has made the rounds of Eastern Europe, the basis of capitalism is the exploitation of man by man, while with socialism the situation is just the opposite. We shall study socialism and free-market competition not as political systems but as different economic principles. As we have indicated, we hope to show that if we study these two principles in their pure forms, their logic will correspond to the rationality of the group selection and gene selection theories rather precisely. At present, there is vigorous debate over which theory correctly describes how evolution operates. No intermediate solution has been forthcoming within the frameworks of these theories, and in the previous chapter we considered that the two theories might indeed be valid simultaneously. We can observe in e...
Read more

1st Bac - Ecuadorian Institute of Social Security

Image
  Benefits of being affiliated to IESS When a worker is affiliated with the IESS, immediately, he begins to have the right to a series of benefits, especially related to the field of health protection that, in several cases, can be affected by the exercise of labor activity you have been hired for. Among the main obligations that must begin to be fulfilled, in a timely manner, from the moment a worker joins the IESS are: payment of personal contributions, payment of employer contributions and payment of reserve funds. Employer contributions It is the additional payment to the worker's compensation that the employer must make on a monthly basis. In the case of private sector workers, who are in a dependency relationship, the contribution is equal to 11.15% that must be paid to the IESS during the first 15 days of each month. Hence, this item must be part of the monthly budget of costs and expenses required by the operation of the business that has been created by the entrepreneur. P...
Read more