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Primary Forces
Porter's model outlines the primary forces that
determine competitiveness within an industry and illustrates how those
forces are related.
The model suggests that in order to develop
effective
organizational strategies,
managers must understand and react to those external forces within an
industry that determine an organization's level of
competitiveness
within an industry.
Limitations of the Porter's
Model
The
new era
of rapid, systemic and radical change requires more flexible, systemic
and dynamic approaches to strategy formulation.
5 Strategic Analysis Questions
Thus today, corporate
strategy formulation
should be a combination of different currently practiced approaches
described above – judgmental designing, intuitive
visioning,
and emergent learning; it should be about transformation as well as
perpetuation; it has to involve individual cognition and social interaction,
co-operative as well as conflictive; it must include analyzing before and
programming after as well as negotiating during; and all of this must be in
response to what can be a demanding environment.
Traditional strategy models, such as Michael
Porter's five forces model, focus on the company's external competitive
environment. Most of them do not attempt to look inside the company. In
contrast, the
resource-based perspective
highlights the need for a fit between the external market context in which a
company operates and its internal capabilities.
In contrast to the Input / Output Model (I/O
model), the resource-based view is grounded in the perspective that a firm's
internal environment, in terms of its resources and
capabilities, is more critical to the determination of strategic action
than is the external environment.
Market Leadership Strategies
The market leader
is dominant in its industry and has substantial market share. If you want to
lead the market, you must be the industry leader in developing new
business models
and new products or services. You must be on the cutting edge of new
technologies and innovative business processes. Your customer value proposition
must offer a superior solution to a customers' problem, and your product must be
well differentiated...
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2 Business Growth Strategies
Inspirational Business Plan:
Successful Innovation
Operational Plan: "We don’t have a
traditional strategy process, planning process
like you’d find in traditional technical companies. It allows Google to
innovate very, very quickly, which I think is a real strength of the
company."
– Eric Schmidt...
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