Strategic Management
Name
Institution
Question One
The video gives a more straightforward explanation of Porter’s five forces that shape a business’s attractiveness and competitiveness in the industry. Through the analysis, we find out if it is feasible enough to venture into the particular industry and scrutinize if it is a growing industry, and if we can carve out a defensible market niche that will insulate ourselves reasonably well from the competitors (Alanis Business Academy, 2013). Eventually, the aim is to sustain a competitive edge. There are five variables, as mentioned in the video. They include competitive rivalry, entry barriers, the threat of substitutes, buyer power, and suppliers’ control (Alanis Business Academy, 2013).
Question Two
From the video presentation, we can deduce that competitive rivalry depends on the size and number of firms. I think that the more the firms, the more competitive the respective industry is. Capital expenditures, cost advantage, and brand loyalty determine the extent of entry barriers. The threat of substitution fulfills the same underlying need. Buyer power is a buyer’s ability to exert control over price, and buyers can, in specific industries, have a significant impact. Typically, you have firms or buyers that are significant in quantity, and they often can exert a lot of pressure. If one is to enter an industry, one needs to research the need to conform to certain price levels. Some buyers have the power to exert downward pressures on price. The other variable is the control of suppliers, depicting the extent to which suppliers can exert control over price.
Regarding new entrants, it is more convenient when the entry barriers are low. On the other hand, it is more favorable for an established company in an industry when the entry barriers are high (Alanis Business Academy, 2013). Each of the five forces intertwines each other, i.e.; one variable can affect another.
Question Three
The risk of entry refers to the governing, technical, procedural, and economic aspects that hinder new business establishments’ entry into a market or industry. In other words, this relates to the barriers to entry. For instance, in the fast-food industry, new competitors affect McDonald’s financial performance and market share. Its average threat is dependent on external aspects such as high brand improvement costs (weak force), highly mutable cost on capital (moderate force), and low costs of switching (strong force).
Question Four
The threat of substitutes is a risk level that corporate encounters from substituting similar services or products from competitors within the same market or industry. Various factors can increase or decrease the substitute risks. Low or zero switching costs for a client enhance the client’s higher chances to opt for an alternative and attractive service or product. For instance, a customer wants to replace cable TV subscription with Netflix unless there’s a cost linked with unsubscribing to the cable service. If a product or service price is high, the chances of substitution are high. Other factors include the availability of substitutes and product function and quality. For instance, flight delays can make travelers opt for the train due to its efficiency and on-time performance.
Question Five
As mentioned in the earlier video presentation, suppliers’ bargaining power depicts the extent that suppliers can exert control over price. It manipulates the industry’s competitive model and aids in establishing the industry’s allure. The supplier bargaining power is high when substitutes are absent, supplier switching costs are low, buyers are more than suppliers, and there is a high threat of forward integration. For example, in the fast-food industry, suppliers come in terms of the obtainability of raw materials for Burger King’s production capacity. Its supplier bargaining power is weak, influenced by high supply (weak force), low onward supplier perpendicular assimilation (weak force), and a significant number of suppliers (weak force).
Question Six
The value of stretch objectives refers to the additional strategic goals that have targets set above what was to be achieved, which is often challenging. It aims to bolster the chances of sustaining a competitive advantage. For instance, a strategic goal would be to increase revenue by twenty percent in the upcoming financial year, while the stretch objective would be increasing revenues by one hundred and fifteen percent to become the number one fashion company in the U.S. market this year.
Question Seven
I believe General Mills is a great place to work in, whereby when you join as part of the team, you impact immediately. There are training opportunities that help an employee get acquainted with his or her role in the team. They conduct core business essentials training and the grand champion string to boost brand quality and association in the company. Based on the video, General Mills is performance-driven, where staff believe in doing the right thing all the time and are innovative (GeneralMillsCareers, 2012). New employees are challenged during their training and mold them to be productive and skillful. Working there improves one’s quality of life.
Question Eight
I agree with the statement based on the video. There is nothing as good as contributing to an organization’s success and being recognized for your efforts, especially as mentioned about the Millennials. Investing in human resources through training and development of new employees to make them feel valued in turn positively affects the organization. It boosts their productivity and overall good performance of the company.
Question Nine
According to Jones (2020), a deliberate strategy is an aspect of the envisioned strategy that sustains an unremitting part of its existing strategy. On the other hand, an emergent strategy is a vital determinant of the final recognized strategy, which constitutes the managerial decisions emerging, mostly affected by external factors (Jones, 2020). For example, Delta Airlines’ deliberate strategy is to sustain higher margins than competitor airlines continually. An emergent strategy would be staying afloat business-wise during the post-Covid-19 period.
Question Ten
Three of the most fundamental drivers of change in the smartphone industry include technological innovation, changing consumer lifestyles, and globalization. Innovation is critical to differentiate from other cell phone brands, more so with the product features. With the abundance of the internet, which has brought more opportunities, it shapes people’s changing lifestyles across the globe. Due to globalization, there is an increase in the way people connect and access online services, which drives change in the industry.
Question Eleven
| Vision Statement | Effective Elements | Shortcomings |
| American Express | Making Amex the world’s most respected service brand. | Mentioning the aspect of working hard every day. |
| Hilton Hotels Corporation | To be the first choice of the world’s travelers. | The description of building a brand is a mission statement, not a vision statement. |
| MasterCard | A world beyond cash. | Sounds like a corporate slogan. |
| BASF | The chemical company successfully operating in all major markets. | The points look more of the company’s core values. |
In order of priority, the best to worst vision statements from the Table include Hilton Hotels Corporation, American Express, BASF, and MasterCard.
Question Twelve
- External Factors
In a bid to boost sales during the Covid-19 pandemic, the proprietor of Kings Food Markets and Balducci filed for bankruptcy (Fitzgerald, 2020). The coronavirus pandemic has necessitated financial challenges during the year 2020 – a major external factor – have forced KB’s resolution to restructure through the Chapter 11 bankruptcy process.
From the article, other retail outlets that filed for bankruptcy due to poor business performance necessitated by the pandemic include Earth Fare, Lucky’s, and Fairway Market (Fitzgerald, 2020). The KB US Holdings acquired a USD twenty million commitment in defaulter-in-control financing from its current secured creditor, which it will utilize in concurrence with the money it brings in from its business operations to help it continue consecutively during this sale process. This poses an opportunity for the externality. Its challenges are significant, with the business environment being unappealing, in addition to increased operational costs in implementing health and safety measures to manage the spread of the novel virus.
Kings and Balducci’s stores faced stiff competition from other retail outlets. The competitive forces are felt through several market segments that contain global, national, regional, and local retail chains such as Walmart, Trader Joe’s, ShopRite, Stop & Shop, and online shops such as Target and Amazon.
- How one of Porter’s Five Forces Model is used in the Article
One of the forces mentioned in the article is the threat of substitution. Since Kings and Balducci’s stores specialized in offering fresh and prepared foods in its retail outlets, several other competitors have grown aggressively in marketing a vast array of organic and natural foods, quality specialty-grocery stuff, and prepared foods at almost the same process as in KB. The low switching costs make consumers opt for substitute products and services. This further fuses the debtor’s venture’s viable nature due to the geographical nearness between KB outlets and its competition (Fitzgerald, 2020).
References:
Alanis Business Academy (2013, January 18). Porter’s Five Forces of Analysis: How to Determine the Attractiveness of an Industry. [Video]. YouTube, https://www.youtube.com/watch?v=uvwjip3CTMA&feature=emb_logo
Fitzgerald, P. (2020, August 24). Owner of Kings and Balducci’s Supermarkets Files for Bankruptcy. The Wall Street Journal, https://www.wsj.com/articles/owner-of-kings-and-balduccis-supermarkets-files-for-bankruptcy-11598289178
GeneralMillsCareers (2012, September 19). The Mission, Values, and People of General Mills. [Video]. YouTube, https://www.youtube.com/watch?time_continue=4&v=FqATyJhPZvU&feature=emb_logo
Jones, P. (2020, May 30). Deliberate or Emergent strategy: when to choose either or both. Excitant, https://www.excitant.co.uk/deliberate-vs-emergent-strategy/
Lecture notes (n.d.). Chapter 2: Charting a Company’s Direction.