Competing in overcrowded industries is no way to sustain high performance. Our real opportunity is to create Blue Oceans of uncontested market space
One of the main tasks of a manager is to know the whole environment of its markets, take decisions, innovate and give a close follow-up.
Based on Porter’s model we can conclude that the most likely to be affected by any substantial movement on price are three: the first two are based on the bargaining power of suppliers (managing inventories) and buyers (looking for complementors), and in the risk of entry by potential competitors (trough cost reductions, discounts).
One of the main implications on the war price is that most of the corporate strategies are heavily influenced by its roots in military strategy. The very language of strategy is deeply imbued with military references— chief executive “officers” in “headquarters,” “troops” on the “front lines.” Described this way, implications on strategy is the price where most of the companies are competing to obtain the preference of the competition’s clients, and its satisfaction, but after all, the implications to deal the treats that price war has are far more than in the existing marketplace, is to beat the competition through cost lowering, exploit existing demand, make the value/cost trade-off and align the whole companies- system with its strategic choice of differentiation or low cost.
If we analyze an article that illustrates the situation of the Miller Brewing Co. in the modern beer industry, we see they are poised for success.
Risk of entry by competitors is very high. Micro-breweries and micro-brews have rapidly sprung up across the nation. Millers Miller Genuine Draft now faces 40 competing beers offered by every major and minor brewer. Local breweries are also able to manufacture unique and specialized beers to meet the demands of a diverse consumer market. In addition to this the growing diversity of nationalities in America contributes to beer drinks that have a much wider range of tastes.
Rivalry among established firms is extremely high. Major rivals exist because of the enormous profits that are to be reaped from the beer market. This escalates the rivalry for market share and companies like Anheuser-Busch, who is the nations leading beer provider, compete with the closest competition (Miller) as intensely as PepsiCo and Coca Cola.
If we choose as market analysis, a growth industry, we can be referred to Internet, is a technology that provides better opportunities for companies to establish distinctive strategic positioning that did previous generation of information technology. The main distributors are Explorer and FireFox, and analyzing the forces illuminates an industrial’s fundamental attractiveness, exposes the underlying drivers of average of industry profitability and provides an insight into how profitability will evolve. The five forces still determines even if suppliers, channels, substitutes, or competitors change. The internet trends to dampen the bargaining power of channels by providing companies with new, more direct avenues to customers, also provides buyers with easier access to information about products and suppliers, then, mitigating the client needs as an established sales-force or access to existing channels, reducing the barriers to entry, with practically no extent of product differentiation.
Now taking as a case study the old manufacture and hand-craft of Guitars in the US, we can perceive that basically there’s just three big manufactures that dominate the 90% of this market’ sales, mostly distributed by a dealership contracts, or directly by Internet; as Internet, there’s no barriers of entry, and the main differentiation on its product lies on the wood, the tone, craftsmanship and minor details.
As a declining industry, we can observe the Oil markets, where a bunch of suppliers around the world are fighting every day, every minute, to increase the all-devaluated oil prices, where new technologies are being developed to lower the dependency on oil extracts, where the distribution means billions of billions of dollars, is in frankly decline since 4 years ago, where there are high barriers to entry and the height of these companies is so huge, that nobody can enter the market, mainly due to government regulations and so on, and the extent of the differentiation of the product is nil, just the transportation cost and tax regulations among countries are the obstacles, even tough these companies are involved in the so-called social opportunities, the final result is closer than we though.
All these factors says that Internet has a wide-open doors to receive new competitors to provide the service, which helps to low cost and provide a better service to final customers; the guitar manufacturing is stuck on its own market, nobody can increase its position widely, but remain in the market is a must almost for everyone, and finally the oil dependency is closer to an end, so maybe in a couple of years we may improve our usage and sources of energy, bringing this world a better resource of all kinds of energy.
As the author states, the macroeconomic forces will affect the general health and well-being of a nation or the regional economy of an organization, and translating this to our university, I can assure that our professors and academic employees will be widely beneficiated trough a better job plans and compensations, and will also increase the demand of better qualified teachers among the universities and schools, wetter private or public.
Strategic Business Management 