The objective of the Porter’s 5 forces model is to identify and elucidate the current levels of competition existing with a market, by examining what the 5 forces
Successful use of the Porter Model Analysis includes identifying the sources of competition, the strength and likelihood of that competition existing, and strategic recommendations for the action a company should take to develop barriers to the various forms of competition (Prahalad and Gary, 1990). With the realization about intensity and power of competitive forces, organizations can develop options to influence them in a way that improves their own competitive position. The result could be a new strategic option, e.g. a new positioning; differentiation for competitive products of strategic partnerships.
Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.
Choose a specific industry (e.g., grocery retailing, the airline industry, etc.), and apply Porter 's Five Forces Model to discuss that industry 's competitive forces and their relative influence.
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
Eventually it is information that allows a firm to create a justifiable position for itself against the five forces. The extent to which IT organization can offer competitive advantage via IT depends on the organization’s ability to drive value from “Information” factor of the ultimate product / service.
Michael Eugene Porter is an economist, author, advisor and a researcher. He is the creator of Porter Five Forces theory, which is a framework for a business. The model “identifies and analyzes five competitive forces that shape every industry, and helps determine an industry 's weaknesses and strengths” (Investopedia LLC, 2016). The five forces are competitive rivalry, bargaining power of buyers, bargaining power of suppliers, threat of new entry, and threat of substitution. This is a very important theory which a business can strengthen their position.
“It’s getting much harder to achieve a competitive advantage through an IT investment, but it is getting much easier to put your business at a cost disadvantage”.
The original business strategy, which is still not fully implemented or thought out, is still intact and being somewhat utilized. Part of getting from where we are now to where we want to go, is to put together a comprehensive business and growth strategy plan that, brings about the most results. The original business strategy resembled that of a small business that had the most growth with the least risk. With little risk also means little or no technology. The company has changed, the competition is more intense and the economy is weakened. A new strategy that aligns with technology is essential in order to be successful. As business and technology have become increasingly intertwined, the strategic alignment of the two has emerged as a major corporate issue. With the emergence of IT from the back room to the forefront of business brings the alignment issue under the spotlight like never before. And as
The same principles are followed in other types of organizations that is focusing only on core competencies and offloading other tasks for suppliers. IT organizations can help their parent company by emphasizing only on core competencies. Since, technology has become highly complex and broad therefore it needs number of specialties. Advancements are made to the technology every day and the one who comes up with the consumers' demands rules the market. Therefore, in such scenario, the IT Company must identify its core competencies and polish them as smoothly that it outperforms competitors.
IT by itself does not provide any value, however, the alignment of IT to strategic, operational, and cultural objectives provides business value. Thus, the CIO must ensure that any new investment in IT is for the sake of business objectives and not for “IT for ITs sake”. Ensuring business alignment against IT project delivery is critical, must be undertaken for any investment and is the key component of IT value.
INFORMATION TECHNOLOGY CANNOT REALLY GIVE A COMPANY A STRATEGIC ADVANTAGE BECAUSE MOST COMPETITIVE ADVANTAGES DON’T LAST MORE THAN A FEW YEARS AND SOON BECOME STRATEGIC NECESSITIES THAT JUST RAISE THE STAKES OF THE GAME. DISCUSS?
The “IT alignment trap” occurs when IT spending is highly aligned with business strategic objectives, but IT is not effective in achieving those goals. IT and business priorities must be tightly linked. This means IT spending must be matched to growth strategies for the organization as a whole. Effective management of IT initiatives occurs when there is shared ownership and governance of IT projects. To avoid the “IT alignment trap”, IT needs to be both highly aligned with overall business strategic objectives and highly effective at helping achieve those goals.
The fact that opportunities for strategic advantage from information technology is rapidly disappearing, it is important that companies look critically at how they invest in IT and how they manage their systems by avoiding wasteful spending, waiting to purchase an IT commodity until you are sure of its authenticity and also focus on vulnerabilities not opportunities.
In accordance with Chan’s (2002) views, there was no structural alignment in the process as the responsibility of managing IT was shared resulting in a tiny business growth. After forming the BPTO and undergoing strategy change, the company came up with roles for IS as a strategic alignment (Chan, 2002) by categorizing them and relating them to business goals. This comparison articulated the priorities of a