Strategic Management
3rd Edition
ISBN: 9781259420474
Author: Frank T. Rothaermel The Nancy and Russell McDonough Chair; Professor of Strategy and Sloan Industry Studies Fellow
Publisher: McGraw-Hill Education
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Question
Chapter 3, Problem 2DQ
Summary Introduction
To determine: The way the five forces model would affect the average profitability of the industry.
Introduction:
Strategic management refers to formulating and implementing the way to achieve the goals by considering available resource and the internal and external environment. It will be framed by the top management on behalf of an organization.
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How do the five competitive forces in Porter’s five forces model affect the average profitability of the industry? For example, in what way might weak forces increase industry profits, and in what way do strong forces reduce industry profits? Identify an industry in which many of the competitors seem to be having financial performance problems. Which of the five forces seem to be strongest?
Identify the six forces that shape competition in an industry. Describe how changes in the strength of these forces affect prices, profitability, and under which circumstances each can be considered a threat or opportunity. Why is a competitive analysis using the competitive forces framework a benefit to industry?
A profitable company will make it a point to determine how its competitors are doing business and try to do it better themselves. Benchmarking is one of the most effective tools available to an organization to ensure that these goals are being met.
Many organizations use benchmarking as a way to measure organizational performance. What are the pros and cons of this approach? Has this approach always been used as a competitive tool? Provide at least two examples of companies using this type of tool to help them remain competitive within their market.
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Similar questions
- Consider how contemporary business environments can be supported by a strategic focus on cost management, business analytics, and total quality management to enhance decision-making. Discuss how one of these alternative costing methods supports a company's ongoing competitive advantage in a business. Explain your rationale.arrow_forwardSuppose that General Electric and Toyota Motors are both planning to manufacture electric cars. Which company do you think will have a competitive advantage in this venture? Justify your answer by enumerating the competitive advantages of the firm that you have chosen if it pursues this business.arrow_forwardIdentify two current organizations—one organization facing a low-risk competitive environment and one facing a high-risk competitive environment. For each of these organizations, explain why you have evaluated its competitive environment as either low risk or high risk, using strategic planning and analysis concepts (such as Porter's Five Forces Model) For each of these organizations, recommend a pairing of a system design tool and a system operation tool that you believe will work especially well in the competitive environment faced by the organization. Be sure to explain why the tools you have chosen are uniquely suited to the competitive environment faced by that organization.arrow_forward
- Discuss the Five forces Model of competition put forth by Michael Porter. Also discuss why a company must constantly analyze its competition and the methods it can use to assess its competitive environment.arrow_forwardThe pursuit of competitive advantage requires a strategist to discover or build a company’s core competencies which will constitute the vehicle that will drive the implementation of successful strategies. A renowned global consulting firm, McKenzie Consulting Group states that “in order to gain and sustain competitive advantage, an organization should at least possess three core competencies which will form the foundation upon which successful strategies are developed”.arrow_forwardSustaining competitive advantage can be challenging. The entry of new competitors, the possibility of imitation, and the changes in the firm’s context can affect the firm’s profitability and, historically, have affected firms that had competitive advantage in very distinctive ways. For instance, Coke and Pepsi have sustained their market dominance for nearly a century. On the other hand, General Motors and Ford were hit hard by competition, in particular of foreign companies entering the market, and never fully recovered. What is different about the product/market situation in these cases that affects the sustainability of their competitive advantage? Which elements of the strategic landscape were responsible for Coke and Pepsi’s success and which elements were instrumental in GM and Ford losing an important share of the market?arrow_forward
- What occurs when a company seeks to match what a competitor is doing while maintaining its existing competitive position?arrow_forwardWhen does a firm have a competitive advantage over its rivals?arrow_forwardThe Five Forces Model of Competition The character and complexities of competitive forces are rarely the same from one industry to another and must be thoroughly understood to answer such questions as: “Where are we now?” Michael Porter’s Five Forces Competitive Model is the most widely used tool in business today in determining the competitive intensity and therefore attractiveness of a particular industry. This model, as depicted in Figure 3.3, holds that competitive forces affecting industry attractiveness go beyond rivalry among competing sellers and include pressures stemming from four coexisting sources. The five competitive forces affecting industry attractiveness are listed below: 1. Competitive pressures stemming from buyer bargaining power. 2. Competitive pressures coming from companies in other industries to win buyers over to substitute products. 3. Competitive pressures stemming from supplier bargaining power. 4. Competitive pressures associated with the…arrow_forward
- How do you categorize these key issues when researching the company's competitors, including:Their competitive advantage, Competitor intelligence focuses on competitor capabilities, andCompetitor strategies and prediction of response patterns, and how competitors will react to future actions of the company?arrow_forwardHow can we assess the competitive landscape and identify potential competitors and market trends?arrow_forwardCan you think of firms that have successfully created a competitive advantage even though other firms provide essentially the same thing? What factors enable this success?arrow_forward
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