Michael Porter, a world-renowned strategy professor at Harvard, recognizes five forces that form the profit-making potential of the average organization. Porter’s Five Forces Analysis allows organizations to more closely examine external forces that may impact profitability and that are closer to the specific organization. Taken together, the results of these analyses provide a comprehensive picture of the external environment of the organization.
To prepare for this Assignment, review “Nokia and the Smartphone Industry” on page 22 of Dyer, Godfrey, Jensen, and Bryce (2016), and complete a personal version of the Rivalry Strategy Tool provided on page 41 of the text. Be sure to consider the potential impact of the Five Forces as a tool for shaping industry competition and strategy development.
Submit a 3- to 5-page analysis of the influence of market selection in business strategy development. Your analysis should address the following:
- What is the intensity of rivalry—high, medium, or low—within the smartphone manufacturing industry? Explain your answer using the Rivalry Strategy Tool.
- What is the intensity of supplier power—high, medium, or low—within the smartphone industry? Explain your answer using the Rivalry Strategy Tool.
- What is the importance of correctly identifying and choosing a firm’s industries and markets? Justify your answer with at least one example.
- How does accounting for gaining and sustaining competitive advantage impact the success of business strategy development? Explain.Evaluating the Intensity of Rivalry (Mark an X in the appropriate box for each factor.)
1 2 3 4 5 <40% 40-50% 50-60% 60-70% >70% 1. Number and Relative Size of Competitors
· Top 4 competitors’ combined industry marketing share
Explanation/Source of Data: _____________________
High Med. Low <2% 2-5% 5-10% 10-15% >15% 100% 75% 50% 25% 0 Low Med. High Low Med. High 2. Degree of Industry Product Standardization
(take the average of bullet points below)
· Difference between competitors in price of similar products
Explanation/Source of Data: _____________________
· What % of industry’s products are sold at discount?
Explanation/Source of Data: _____________________
· Customers’ ability to recognize brands from industry
Explanation/Source of Data: _____________________
· Degree of switching Costs
Explanation/Source of Data: _____________________
<0% 0-1% 1-3% 3-5% >5% 3. Industry Growth Rate
Explanation/Source of Data: _____________________
<70% 70-80% 80-90% 90-100% >100% 4. Unused Industry Production Capacity
· % of industry wide production capacity currently in use
Explanation/Source of Data: _____________________
High Med. Low 5. Degree to which firms have high fixed costs or products have
high storage costs of are perishable
Explanation/Source of Data: _____________________
High Med. Low 6. Extent of Exit Barriers
Explanation/Source of Data: _____________________
Fiercely Competitive Neutral Mildly Competitive Overall Intensity of Rivalry
(take the average of the major factors, items numbered 1 through
6)
Dyer, J. H., Godfrey, P., Jensen, R., & Bryce, D. (2016). Figure 2.4, Strategy tool: Evaluating the intensity of rivalry [Table]. In Dyer, J. H., Godfrey, P., Jensen, R., & Bryce, D., Strategic management: Concepts and tools for creating real world strategy (41). Hoboken, NJ: Wiley. Reprinted by permission of Wiley.