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The Forces that Shape Company Strategy
• You know that to sustain long-term
Success and Profitability you must
respond strategically to competition
• You need to be aware of all the
elements that are affecting the:
– Market,
– The Production Line and
– Customers.
Forces that Shape StrategyIntroduction
• According to Porter, there are 04
competitive forces that can harm our
company success:
– Savvy Customers,
– Powerful Suppliers,
– Aspiring Entrants and
– Substitute Offerings.
Forces that Shape Strategy Introduction
• Definition of Savvy Customer:
– Well informed and perceptive
Customer.
• Savvy customers can force
down prices by playing you
and your rivals against one
another.
Forces that Shape Strategy Competitive Forces – Savvy Customers
• Definition of Supplier:
– Someone whose business is to
supply a particular service or
commodity
• Powerful suppliers may
constrain your profits if they
charge higher prices.
Forces that Shape Strategy Competitive Forces – Powerful Suppliers
• Definition of Aspiring:
– To have a great ambition or ultimate
goal; desire strongly
• Definition of Entrants:
– One that enters, especially one that
enters a competition.
• They are armed with new capacity
and hungry for market share.
Forces that Shape Strategy Competitive Forces – Aspiring Entrants
• New products and services can
lure customers away with new:
– Opportunities,
– Benefits,
– Advantages,
– Low Price,
– Feeling of well-being,
– Illusions.
Forces that Shape Strategy Competitive Forces – Substitute Offerings
Forces that Shape Strategy Ways to deal and overcome the Forces
• We need to reshape
the forces in our favor,
based on new tactics to
reduce the impact of
profit leaking.
Forces that Shape Strategy Ways to deal with the Forces
Main Goal Action
Neutralize the
Supplier Power
Standardize specifications for parts so your company
can switch more easily among
vendors.
Forces that Shape Strategy Ways to deal with the Forces
Main Goal Action
To counter customer power
Expand your services so it’s harder for
customers to leave you for a rival.
Main Goal Action
To temper price wars initiated by established
rivals
Invest more heavily in products that
differ significantly from competitors’ offerings.
Forces that Shape Strategy Ways to deal with the Forces
Main Goal Action
To scare off newentrants
Elevate the fixed costs of competing; for instance, by escalating your R&D
expenditures.
Main Goal Action
To limit the threat of substitutes
Offer better value through
wider product accessibility.
Author Roberto Lico Jr.
[email protected]@hotmail.com
Linkedin: http://goo.gl/UgCKETwitter: @licoreis