Strategy
Michael Porter 5 forces Model
(forces that shape competitive strategy at the business level)
1. Supplier: Bargaining power of the suppliers
Worst Case:
Supplier controls full supply (no competition)
Customer unimportant
Ex: Jackson red boot
2. Customers: bargaining power of the customer
Worst Case:
Ex: Wal-Mart with P&G and Gillette
Customers cannot legally band together
3. Substitutes and new technology: threat of substitute products
Research and Development
· Example: Sugar – neutral sweet – splenda
· “ Do not, will not”
High/low technology: percent of revenue spent on research and development
· Highest technology –pharmacy (Zimmer, bio-met and Depuy)
4. Barriers to Entry: risk of entry by potential competition
Ex: Harley Davidson-blocked Yamaha and Honda
Strengthened
5. Competitors: rivalry among established firms
Best Case:
Bausch and Lomb, contact provider
Bought up of defected competitors
Majorly applies to “barriers to entry”
Jack Trice, IOWA STATE
Are cars like rice? Bad position or a commodity?
15 minutes of fame = electric starter, radial tires, EFI, AIRBAGS, 0-60 MPH, defects
(smaller margin)
Advantage is temporary
Cars are like rice, only if you let them be
10 Box Full Professional SWOT Model of the strategy process:
5 Characteristics of Process
Rigid Order: Michael Jordan Rule
Salvationary
Mundane: team power
Perpetual: keep at it
· All important- “love your daughter more”
SWOT Model:
1. Mission
Say who we are, what we stand for
· “True”, not hogwash motivational, no charm school
2. External Analysis
5 micro environmental factors
Porters 5 rules
Threat and Opportunity
3. Internal analysis
Strength and Weakness
4. Interactive analysis
SWOT
5. Long term goals (5, 15, 20 years)
Example: Increase market shares by 25% in 5 years
6. Long term strategies
Build: Build the market (ex. breakfast with coke/snickers)
Win: take away from someone else (ex. breakfast cereal)
Acquire: merger (ex. bring aboard other competitors)
7. Short term goals (1 year or less)
Increase market share by ___% in one year
o 1%- “steady as she goes” start of slow
o 5% logical not necessary
o 30% get that and expect fall out
8. Short term strategies
9. Strategy implementation managing (leadership)
Constant struggle
10. Monitoring, control and feed back
Continually riding the surf
1-8 Strategy Formulation Design of Purpose
3 Logics
Goals before strategies with each term
External before internal
Long term before short term
9-10 Strategy implementation accomplishment of purpose
Where is our need for knowledge the greatest
