Case Study
Competitive Strategy Over the Web Assignment:
In this case study, you will research an organization and determine how their business strategy differentiates them from other organizations in the same industry using Porter's four competitive strategies model (p. 85).
Write a one- to two-page (250-500-word) paper to include the following:
- A brief explanation of Porter's four competitive strategies.
- A brief explanation of how competitive strategy determines value chain structure.
- Identify and discuss the competitive strategy that the organization you researched utilizes to differentiate them from other organizations in the same industry.
APA rules for formatting, quoting, paraphrasing, citing, and listing of sources are to be followed.
(Taken from Page 85 of textbook)
Q2 What Five Forces Determine Industry Structure?
- Organizational strategy begins with an assessment of the fundamental characteristics and structure of an industry. One model used to assess an industry structure is Porter's five forces model,1 summarized in Figure 3-2.
According to this model, five competitive forces determine industry profitability: bargaining power of customers, threat of substitutions, bargaining power of suppliers, threat of new entrants, and rivalry among existing firms. The intensity of each of the five forces determines the characteristics of the industry, how profitable it is, and how sustainable that profitability will be.
Jason is concerned that 3D printing may place AllRoad Parts at a competitive disadvantage. Figure 3-4 shows the team's analysis of the new competitive landscape. The larger customers from whom the company receives two-thirds of its revenue (major bike shops, motorcycle dealers, Jeep and other customization shops) will gain considerable force power if they can make parts themselves using 3D printing.
The threat of new entrants from existing, local manufacturers is also strong. The other forces are not as worrisome to AllRoad. In most cases, there aren't any substitute repair parts, and, given the reality of 3D printing, AllRoad Parts' suppliers are likely to sell 3D designs for repair parts ... to protect the sales of their gear.
Jason doesn't think the threat of 3D printing from rivals is as strong because, like AllRoad Parts, they don't have manufacturing systems, processes, or expertise, either.
Figure 3-4 Five Forces at AllRoad Parts Like AllRoad Parts, organizations examine these five forces and determine how they intend to respond to them. That examination leads to competitive strategy.
Q3 How Does Analysis of Industry Structure Determine Competitive Strategy?
- An organization responds to the structure of its industry by choosing a competitive strategy. Porter followed his five forces model with the model of four competitive strategies, shown in Figure 3-5.2 According to Porter, firms engage in one of these four strategies.
An organization can focus on being the cost leader, or it can focus on differentiating its products or services from those of the competition. Further, the organization can employ the cost or differentiation strategy across an industry, or it can focus its strategy on a particular industry segment.