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Porter's Five Forces Model - MHN123208 - Business Strategy

7 Pages1280 Words973 Views
   

Glasgow Caledonian University

   

Business Strategy (MHN123208)

   

Added on  2020-03-04

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In the MHN123208 Assignment, we will discuss The Porter’s Model considers five Microeconomic Elements which impact the power of the companies to profit in the international competitive environment. These five forces are defined below. The bargaining power of customers can be defined as situations when customers have the power to put the firms under pressure to sell products at lower prices. Exploring strategy model: Porter’s Generic Strategy model describes how companies gain a competitive advantage in the international market. Strategic Planning with Porter's Five Forces.

 

Porter's Five Forces Model - MHN123208 - Business Strategy

   

Glasgow Caledonian University

   

Business Strategy (MHN123208)

   Added on 2020-03-04

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Running head: STRATEGIC PLANNING AND PORTER’S MODEL
Porter's Five Forces Model - MHN123208 - Business Strategy_1
1STRATEGIC PLANNING AND PORTER’S MODELAnswer 1:Definition of five forces:Porter’s Five Forces model can be defined as a framework which analyses the complexexternal factors organisations face from external environment which necessitate them to formsuccessful strategies to sustain in the international market. The Porter’s Model considers fivemicro economic elements which impact the power of the companies to profit in the internationalcompetitive environment. These five forces are defined as under:Threats of new entrants:The threats of new entrants can be defined as the threats existing companies functioningin an industries face from the newly emerging firms. These threats from new entrants are oftenchecked by limitations or incumbents like existence of barriers to entry and productdifferentiation which prevent them from entering the market. Threats of substitutes:Threats of substitutes can be defined as the existence of products from outside an industrywhich tends to limit the sale of its products. For example, increase among customers to consumetea may result in fall of sale of coffee. Here tea though not from the coffee industry can affect thesale of coffee products.Bargaining powers of customers:Bargaining power of customers can be defined as situations when customers have thepower to put the firms under pressure to sell products at lower prices. The buyers’ bargaining
Porter's Five Forces Model - MHN123208 - Business Strategy_2
2STRATEGIC PLANNING AND PORTER’S MODELpower increases when there are several firms selling almost similar products and availability ofsubstitute products easily at affordable prices.Bargaining power of the suppliers:Bargaining power of the suppliers or market of outputs may be defined as the situationswhen the suppliers have the power to increase the prices of the products. The bargaining powerof the suppliers may increase under situations like product differentiation, strong distributionchannel and small number of competing firms and so onIndustry rivalry:Industry rivalry can be defined as situations when there exist a high degree ofcompetition among the firms in the market. The factors which lead to industry rivalry areinnovation, sustenance, competition on the online platform and firm concentration.Exploring strategy model:Porter’s Generic Strategy model describes how companies gain competitive advantage inthe international market. The model stands on three pillars namely, cost leadership,differentiation and focus or niche marketing. The focus strategy is further divided into cost focusand differentiated focus. Cost focus leadership strategy:The cost focus strategy model by Porter revolves around achieving cost leadership in themarket by increasing profits and reducing their costs. The companies using this strategy chargevery lower prices for their products and are able to attract large number of consumers. Thisgenerates high revenue due to increase in sales which allow these companies to distribute their
Porter's Five Forces Model - MHN123208 - Business Strategy_3

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