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Shaping Strategy How competitive forces shape strategy I. 6 sources of barriers to entry 1. economies of scale 2. product differentiation- must spend lots to overcome
July 8, 2006 Title: Different Approaches to Competitive Assessment and the Impact on Shaping a Company's Strategy Course: MBA 714M Economic Perspective and Analysis
TRAN Dinh Khoi ? AUDENCIA IMM 06-07 KNOWLEDGE MANAGEMENT AS A DOUGHNUT: SHAPING YOUR KNOWLEDGE STRATEGY THROUGH COMMUNITIES OF PRACTICE 1. About the author Etienne
the Airline Industry "More than being helped by computers, companies will live by them, shaping strategy and structure to fit new information technology" (Fortune,
understanding of the critical components of IT strategy and its role in supporting and shaping business strategy decisions and a process of continuous adaptation
Submitted by MBA09 on September 20, 2007
Category: Business
Words: 362 | Pages: 2
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How competitive forces shape strategy
I. 6 sources of barriers to entry
1. economies of scale
2. product differentiation- must spend lots to overcome customer loyalty
3. capital requirements- huge capital for comp manufacturing limits entrants
4. cost disadvantages independent of size- entrenched companies have advantages (learning curve, access, gov subsides etc.)
5. access to distribution channels- existing companies may have those tied up
6. government policy- may limit entry to industries like raw materials and ski resorts
II. HoweverÂ…
1. things change- patent lost, new needs
2. decisions by large segment of an industry can have a major impact on conditions determining threat to entry- auto industry decide to vertically integrate
3. can also have powerful suppliers who squeeze profit out of industry (depends on their importance)
4. powerful buyers (price sensitive, expensive, don't care about quality)
III. Companies can improve position by finding suppliers/ buyers who have least power
IV. substitute products can put damper on companies profitability, especially if they price performance trade off is attractive
V. Companies try to fight for position through price, product and advertising, But if it can't compete anymore, acquisition introduces something new, creates a shift.
VI. Formulating strategy
1. position company
a. strategy can be viewed as building defense against competitive forces or as finding positions in the industry where the forces are weakest
b. Dr Pepper found a niche, unique taste, invested heavily in marketing but didn't try to bud heads with Coke and Pepsi
2. exploit industry change
a. analyze competition (what changes are occurring, predict future profitability of industry)
b. use analysis to jump on opportunities
VII. key to growth is to stake out position...
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