Section I CURRENT SITUATION
“In this era of hyper-competition, globalization, and technological revolution, the importance of speed in the marketplace is increasing”, Matherne, B. P. (2004). This new era is characterized by the evolution of the environment where the companies operate; from the slow-moving oligopolies to the saturated markets where companies need a quick strategic advantage to have the consumers’ preference. Before, it was easy for the companies within an industry to set entry barriers for the competitors, today it is impossible. Now the companies shifted from Mr D’Aveni remarks that it is still possible to take advantage from the competitors if the company reposition themselves in some of the following aspects: price VS quality,
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Now we are on the third era of globalization, where the products not only travel around the world to reach the consumers, but they do it in a quicker way thanks to transnational supply chains. Both, globalization and hyper-competition wouldn’t had reach their actual level without Internet, and which affected Porter’s Five Forces Model in the following way: it lowered the entry barrier (new competitors can enter the online retail market without the same amount of initial investment as before); lowered the life cycle of a product (now the difference is in the customer service); power of customers (now they can research which is a better product in terms of quality, price, raw materials, and they can choose which one fits them better); power of suppliers (they can know the prices at which their competitors sells/buys and offer something better); treat of competition (competitors can know about each other, it diminished the required effort to make a proper research of raw materials/providers/points of sale and costs). The combination of all these factors leads to the reality: the speed-to-market could be an indicator for the NPS (New Product Success); but does the speed to answer to the consumers’ needs always assure the NPS and respond proactively to all the factors that cause …show more content…
By reducing the planning or they don’t even plan at all because they don’t have the time to do it. They prefer to react to the needs rather than plan how they should act proactively; which not all the time is useful for them, even though they have a quick answer for their market. Like Matherne said, planning takes time away from making the firm a “reality”, and they should better spend this time exploiting the identified business opportunity. The markets’ need for a speed action is not the only reason for firms to avoid planning; some owners think that they already have the enough experience in order to make an enterprise to work without the need to plan in a formal way. They believe they have the intuition to make their ideas work and they avoid evaluating the projects carefully before making them to happen. How could an enterprise and its owners be convinced to plan before react to market
Porter’s five forces model is a tool that simple but powerful that help business people understand the relative attractiveness of an industry and the industry’s competitive pressures. Porter alluded to these forces as the micro environment, to balance it with the more broad term macro environment. They comprise of those strengths near an organization that influence its capacity to serve its clients and make a benefit. An adjustment in any of the forces ordinarily require a business unit to re-evaluate the market place given the general change in industry information. The general business engaging quality does not mean that each firm in the business will give back the same benefit. Buyer powers, supplier power, threat of substitute product and
A Porter analysis will be performed throughout this paper, on the internet sales industry. Included in the Porter analysis is six relative competitive forces; threat of new entrants, rivalry amongst firms, threat of substitute services, bargaining power of buyers, bargaining power of suppliers, and relative power of other stakeholders.
A new firm needs to make a trade off between performance and compatibility by employing an evolution strategy (offering a migration path) or a revolution strategy (offering superior compelling performance). A firm also needs to make a trade off between being an open system or a closed system as open technologies are popular but rewards are not as desirable as a proprietary technology holder. By using these strategies, firms in network markets approach by using one of the generic strategies from performance play, controlled migration, open migration and discontinuity.
Primary assumptions to the theory include, high barriers to entry and exit, high sunk costs and imperfect knowledge of the market. In addition, this paper will analyze the company’s current standing in the market along with competitive strategies executed to grasp a greater portion of market share.
Most markets are highly competitive, even if there are only a few organizations offering the product – the competition is for both initial and repeat sales. And of course, all organizations want their “slice of the pie”. With new adventures, however, come large risks. A successful company knows beforehand any issues that might arise so as to best plan how to deal with
Success in world competition turns on efficiency in production, distribution, marketing, and management, and inevitably becomes focused on price. The most effective world competitors incorporate superior quality and reliability into their cost structures. They sell in all national markets the same kind of products sold at home or in their largest export market. They compete on the basis of appropriate value- the best combinations of price, quality, reliability, and delivery for products that are globally identical with respect to design, function, and even fashion. If a company forces costs and prices down, and pushes quality and reliability up, while maintaining reasonable concern for suitability, customers will prefer its world-standardized products. The global competitor will seek constantly to standardize his offering everywhere. The strategy of standardization not only responds to the worldwide homogenized markets but also expands those markets with aggressive low pricing.
As technology continue to refine how products and services are delivered to consumers, competition among industry participants becomes more refined. Organizations that are able to keep up with changing technologies become leaders while those that are not fall behind. Mergers and acquisitions are increasing while causing small businesses to sell out or seek partnerships and cooperatives in order to remain competitive and relevant.
A company needs to create a series of programs to differentiate their product from those from its competitors and to appropriately price the product to achieve the maximum demand, in order to set up the dynamics of its competitive strategy (David, 2007). The competitive strategy of a company is also expected to offer better products or services to its customers, at a reasonable cost. Due to the mass influence of the external environmental on the customers’ preference, it is vital for the company to develop an available competitive strategy to be able to solve a series of problems, and ultimately to improve the company’s performance. Those problems include: how to differentiate its products or service from competitors, how to create market segments to maximize demands, and how to offer a wider range of products or services to better meet the customers’ needs at more acceptable costs (David, 2007).
The threat of new entrants is high in the fast segment. There is a threat of new entrants is because the entry barriers are very low. The business barriers to entry the market could take those forms: first one is the capital costs, the higher the investment required, the less the threat from new entrants. Secondly, regulation and legal constraints are the main concerned points. In most industries, regulations related to health and safety, products handling, and licenses to operate, export, or install new facilities. And other forms of barriers could be brand loyalty which could be an important factor in increasing the costs for customers of switching products. The new entrants need to change the valuable brand suppliers with its efficient economies of scale to have a reasonable supply chain network or corporate with the low cost producers to supply the products in the market. Also it might gain a large market share in the market as well. For instance, Sports Direct Company reported retail sales were £371m while gross profit increased 9.6 percent to £149m, it
All companies desire to dominate any given market without being outfought or outwitted by rivals. However, the implications of
Speed to Market : The Company identified Speed as a means of attaining competitive advantage in the market. The rapid pace of technology shift meant that the company needs to adapt to changes and bring forth the innovations to succeed in the market.
The industry in which the company operates can be characterized as monopolistic competition. This is because, since there are no barriers to entry in this industry, threats of entry by potential entrants has made the industry some-what competitive. But the brand loyalty gained by the firms through massive advertising has rendered the firms within
Every organisation must plan every action it intends to take, in the short-term as well as in the long-term. The company, on the basis of the objectives set by the top management of the organisation should plan for growth, expansion, restructuring of business or otherwise. Every company needs to plan out its strategies according to its future plans in order to avoid surprises and to overcome any challenges they may have to face. Therefore, without planning, the organisation cannot achieve any of its goals.
Competitive strategy is the moves and methods that the firm has taken and is taking to appeal buyers, improve its market position, and to endure competitive pressures. The strategy is about what a firm’s capability to try to knock off competitors and attain competitive advantage, which can be offensive or defensive. There are three approaches to competitive strategy, which are low-cost leadership strategy where struggling to be the overall low-cost manufacturer in the in industry. Moreover, pursuing to distinguish one’s product offering from competitors (differentiation strategy), and the last one is focus or niche strategy where aiming on thin portion of the market rather than the whole market (Porter, 1998).
I. Introduction 1. There are several basic approaches to competing successfully and gaining a competitive advantage, but they all involve giving buyers what they perceive as superior value compared to the offerings of rival sellers. 2. This chapter describes the five basic competitive strategy option for building competitive advantage and delivering superior value to customers – which of the five to