2300 book notes

The more competition in prices the lower the level of

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Unformatted text preview: its goals • SWOT Analysis o internal organizational strengths and weaknesses ! ex: high quality skills in marketing • ! ex: rising manufacturing costs and outdated technology o external organizational opportunities and threats Five Forces Model - five major threats that affect how much profit organizations competing within the same industry can expect to make (PORTER) o the level of rivalry among organizations in an industry ! the more competition in prices, the lower the level of industry profits o the potential for entry into an industry ! the easier, the lower profits o the power of large suppliers ! few large suppliers - they can drive up prices - expensive inputs = lower prices o the power of large customers ! few large customers - can bargain to drive down prices - producers have lower profits o the threat of substitute products ! if substitutes exist, can't demand high prices o when looking at threats and opportunities, managers should focus on these 5 threats as they are the major threats an organization will encounter o hypercompetition - permanent, ongoing, intense competition brought about in an industry by advancing technology or changing customer tastes FORMULATING BUSINESS-LEVEL STRATEGIES • Porter argues that successful strategies reduces risk of five threats • two choices o differentiating the product to increase value ! differentiating strategy - focus all energies on distinguishing the product through product design, quality, or after-sales service and support • can charge a premium price for this o lowering the cost of making the product ! low-cost strategy - focus all energy on driving the costs down below the costs of its rivals ! manufacturers search of new ways to reduce production costs ! can sell a product for less than its rivals and still make a profit o organizations stuck in the middle have lower levels of performance ! there are exceptions of course ! ex: Toyota • superior design and quality while still driving prices down o focused low cost strategy ! serving only one segment of the overall market and trying to be the lowest-cost organization serving that segment o focused differentiation strategy ! serving only one segment of the overall market and trying to be the most differentiated organization serving that segment FORMULATING CORPORTE-LEVEL STRATEGIES • how should the growth and development of our company be managed to increase its ability to create value for customers over the long run • actively seek opportunities to use a company's resources to create new and improved goods and services for customers • concentration on a single industry - reinvesting a company's profits to strengthen its competitive position in its current industry o Apple (iPhones, iPads, etc) and McDonalds (expand locations) • vertical integration - expanding a company's operations either backward into an industry that produces inputs for its products or forward into an industry that uses, distributes, or sells its products o reduces an organization's flexibility to respond to changing environmental conditio...
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This document was uploaded on 02/18/2014 for the course BCOR 2300 at Colorado.

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