SIM336 STRATEGIC MANAGEMENT BEST ASSIGNMENT _Toyota (GC0421)
Table of Contents
1.0 Introduction.
- 0 Findings.
2.1. Overview and Critique of Porter’s model of competition.
Overview of Porter’s Five Forces model
Strengths of Porter’s five forces model
Limitations of Porter’s five forces model
2.2 Company analysis.
Overview of Toyota.
Application of Porter’s Five Forces model to Toyota.
2.3 Does this theory and practice work?.
The impact of globalization on the industry structure.
The impact of deregulation on the industry structure.
The impact of digitalization on the industry structure.
3.0 Conclusion.
4.0 Recommendations.
References.
1.0 Introduction
According to APM (2018), the term ‘Strategic management’ means the implementation, identification, and selection of the long- term goals as well as objectives of a business organization. According to Hunger (2017) notes, strategic management includes three key components such as strategic choice, strategic implementation, and strategic analysis. This paper critically analyzes how Porter’s (1985) model is effective for practitioners to analyze their business competitive situation.
The first part of this assignment describes Porter’s five forces model. Then, it describes the benefits and limitations of Porter’s five forces framework. Next, it describes how Porter’s five forces framework can be implemented in Toyota Company. In the second part of this assignment, the new three forces (Globalization, Deregulation, and Digitalization) are described. This assignment also explains how the implementation of New Technologies influences Porter’s Five Competitive Forces. Finally, this assignment describes conclusions and the recommendations for Toyota Company.
2. 0 Findings
2.1. Overview and Critique of Porter’s model of competition
Overview of Porter’s Five Forces model
Porter’s Five Forces is the analytical framework or the tool for evaluating and analyzing the business’s or organizations’ competition. It helps to determine an organization’s strengths and weaknesses (Aktouf, 2014). In 1979, this model was established by Michael Porter. There are five forces in this model (Andriotis, 2014). These are a) threat of new entrants; b) Bargaining power of buyers; c) Bargaining power of suppliers; d) Threats of substitute products or services; and e) Rivalry among existing firms (Andriotis, 2014). The force of new entrants’ entry affects the existing power of the business. They become an effective competitor like the existing markets (Bruke 2017). It is very easy to enter into a new market because of less time and money.
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In terms of customer bargaining power, there are different types and different levels of choice buyers or customers in the market. They play a major role in the competitive market (Dobbs, 2016). How many buyers a company has and how much it would cost to switch a customer from one company to another company are affected by this. Customers are more powerful in competitive markets (Dobbs, 2016). A company can stay in the market on the basis of the customers’ involvement in this company (Bruke, 2017). In the case of bargaining power of suppliers, when there are few substitutes in the market, suppliers of components, raw materials, services as well as labor to an organization or a firm can be the power source over the firm (Grundy, 2017).
There are potential factors in the bargaining power of suppliers (Grundy, 2017). These are strength channels of distribution, suppliers switching costs, degree of differentiation of inputs, substitute inputs presence, the competition of suppliers, etc. In terms of the threat of substitute products or services, a new company or business can enter into the markets easily as the competitors of existing markets (Grundy, 2017). A new market is a great threat to the existing markets (Bruke, 2017). There are several potential factors for the threat of substitute products. These are: switching costs of the buyer, substitution’s easiness, substitute products that are accessible in the marketplace, substitutes price-performance, etc (Grundy, 2017).
In the case of rivalry among existing markets, for most organizations, the competitive rivalry’s intensity is the major determinant of the industry’s competitiveness. The potential factors of market rivalries are advertising level, a competitive strategy that is powerful, competitive advantage via revolution, etc (Bruke, 2017).
Strengths of Porter’s five forces model
Porter’s five forces conclude the competitive environment of a company that influences the profitability of the company. In addition, both buyers’ and suppliers’ bargaining power has a great impact on the ability of a company to manage business costs. A firm is capable in order to affirm the attractiveness and profitability of the firm after evaluating the Five Forces analysis model, (Johnson et al., 2018). The Five Forces model simplified the theory of microeconomic by utilizing Porter’s five forces only.
It gives the chance to evaluate and assess the difficult communications of competitors in the organization in a planned way (Porter, 2017). As Grundy (2016) stated that, the companies’ managers create higher concentration on the external environment in assessment to the most famous SWOT analysis. The Five Forces model goal is not only to evaluate the attractiveness and profitability of the firm but also to understand the competitive market and company profitability’s main cause (Porter, 2008).
Limitations of Porter’s five forces model
Porter’s Five Forces model includes a number of limitations. Porter’s Five Forces model mainly undertakes a static market structure. Then, this model does not take in the strategic alliances, information system, value chain analysis, etc of an organization (Aktouf, 2014). Porter’s Five Forces model is established by focusing on the ‘competition’ idea. This model also assumes that organizations try to gain a competitive advantage over the other competitors in the marketplace, suppliers, and customers. Porter’s Five Forces model is well-known as well as widely used model in the business sector but this model became simpler day by day (O’sShaughnessy, 2016)…………….
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