Compare And Contrast Five Force Analysis And Competitive Strategy

Porter’s Five Forces was developed in 1979 by Michael Porter as a framework to assess and evaluate the competitive position of a company in an industry. It is based on the theory that there are five forces which identify the attractiveness and competitive strength of an industry. It is helpful to gain an understanding of a firm’s current positon and the position that the firm may look to capture in the future. Porter’s five forces are also used to

To evaluate the operational strategy that affects the level of competitive environment in an industry using Porter’s five force model.

“Porter’s five forces”: Introduction. “Porter’s five forces” is widely applied in today’s business world. Harvard Professor Michael E. Porter’s first HBR article “How competitive forces shape strategy” was published in 1979. It became revolutionary in the field of strategy. Porter’s subsequent work has brought big changes to the study of competitive strategy for corporations, regions, and nations. With assistance from his colleagues from Harvard Business School, Porter continues to update and extend his classic work, providing practical guidance for

In this framework due to Michael Porter there are two high-level stages in the creation of competitive strategy, each stage corresponding to a high-level determinant of profitability mentioned in the previous section. The first stage is the assessment of the attractiveness of the industry in which a given company is embedded based on a structural analysis of the industry. In this stage, called the five forces framework, five forces that influence industry attractiveness are identified, as well as the factors (e.g., number of competitors, size of competitors, capital requirements) that determine the intensity of each force and therefore the cumulative intensity of the five forces. The

This strategy seem challenging since this strategy focus on capture new market and new demand, which it’s required extra efforts in term of innovation of products and promotion in order to make customers realize about their product. Even there are some discussions about the blue ocean strategies; however, based on my review on customers comment said that the practical guidance on how to create them is limited. Therefore, without usual analytic framework which can be used as guidelines to create blue oceans as well as effective principles to manage risk, creating blue oceans viewed as too risky for managers to pursue as strategy for their company.

This TPA will discuss about four competitive strategies according to Porter’s five forces model. Furthermore, this TPA will also use the model to help a Malaysian business partner in order to gain competitive advantages and to sustain those four competitive strategies.

These types are cost leadership strategy, differentiation strategy and focus strategy.cost leadership strategy is when a organization exploits all opportunities that will have a cost advantages to become the lowest cost producer in the industry and be the lowest cost producer leader. Differentiation strategy is when an organization to be unique in the market by producing products and service that are patronized by customers and deemed different from competitors. The third strategy would be when a organization focus on one market or one group of segment in the industry, it narrows down its focus and aims to serve them well, this strategy is characterized as focus strategy or segmentation strategy. Thus, overall, the segmentation strategy is based on a narrow market scope, whereas differentiation strategy and cost leadership is based on the wider market sector. However, what distinguishes the cost leadership strategy from differentiation strategy is the low cost

The blue ocean strategy is a reconstructionist view of the market where no accepted boundaries or structure is present. The structure can be created or recreated by the steps taken by players in the market. Strategy and thinking is not limited by preconceived barriers, and a shift happens from a focus on the supply side to a focus on the demand side. Value innovation takes precedence over competing blindly with a simultaneous focus on differentiation and cost effectiveness. An emphasis on the demand side of the market leads to further wealth creation with high potential for payoffs.

In the earlier work (See Blue Ocean Strategy: how to create uncontested market , 2005) it has been argued two types of strategies: blue ocean strategy and red ocean strategy. Red ocean strategists compete to win market share in traditional mature markets and pursue either a differentiation or cost leader strategy. On the other hand, Blue ocean strategists, create new environments, redefine products or services or the nature of competition, make competition irrelevant, and pursue a strategy of differentiation and low cost. This essay puts an extend view: the applications of Blue Ocean strategy in real cases, and what is key advantage of blue ocean strategy?

Blue Ocean Strategy is a book written and published by Chan Kim and Renee Mauborgne in 2005. More than a decade of research was performed by the authors, and this research is analyzed extensively in the book. The authors were looking for successful companies that broke through the accepted norms of their industries to find greater success. Many of the companies they researched are still leading their industries today. These companies created what the authors define as a blue ocean- that is, “uncontested market space that is ripe for growth,” as opposed to a red ocean- “companies competing with each other over a shrinking profit pool.”

The manner in which firms are able to compete is most commonly categorized by implementing Michael Porter’s strategic typologies. Porter’s strategic theory has been the most widely accepted strategic approach used by fellow academics (Kim and Lim 1988; Bordean et al 2010). Porter proposed three generic strategies namely: cost leadership, differentiation and focus strategy. Warszawski (1996) later introduced a competitive strategy

1. Understand what distinguishes each of the five generic strategies and why some of these strategies work better in certain kinds of industry and competitive conditions than in others. 2. Gain command of the major avenues for achieving a competitive advantage based on lower costs. 3. Learn the major avenues to a competitive advantage based on differentiating a company’s product or service offering from the offerings of rivals. 4. Recognize the attributes of a best-cost provider strategy and the way in which some firms use a hybrid strategy to go about building a competitive advantage and

Blue Ocean Strategy advocates that for a company to be successful, creating and opening a new market space that no one has entered before is essential. In order to gain and to sustain the value-innovation, every single corporate and business owner should create and discover contentious areas of the market that is ready to grow. This market place is called the 'blue ocean ', a term that should be, but still is not, a keystone for the managers. The book accepts the fact that this strategy is not seen applicable enough by saying "too risky

The blue ocean strategy is a new way of thinking and a new path to wining the future. It’s about creating a new market instead of competing with existing ones while keeping the costs low. Moreover, it enables us to concentrate on the creation of new markets via new offerings, with the aim being to make the competition irrelevant so that an organization can grow.

There are some tool produce to help implement blue ocean strategy. The Eliminate-Reduce-Raise-Create (ERRC) Grid is the matrix that help execute blue ocean strategy with the four action framework: eliminating, reducing, aising and creating. ERRC Grid help company to remain on their competitive factors. Eliminating and reduce the factor that the transitional industry take it for granted can help the new strategy to remain unique from the transitional market. Nevertheless, raising and creating some unique competitive factor the transitional market never or seldom offered that is above the industry standard. With all these “Four Actions Framework” the company can escape the transitional red ocean market by activate a new blue ocean market and create a new value curve. (Kim & Mauborgne, 2005)