Management

Discuss the usefulness of Porters five forces model in helping an organization to develop its business strategies. Historical analysis of signals Studying the historical relationship between a firm’s announcements and its moves, or between other varieties of potential signals and the subsequent outcomes can greatly improve the ability to read signals accurately. Searching for signs […]

The manner in which strategic changes are implemented When introducing a new product it can be initially introduced to a peripheral market or it can immediately be aggressively sold to the key customers of its rivals. A price change may be made initially on products that represent the heart of a competitor’s product line, or

TYPES OF MARKET SIGNALS Market signals have two different functions: they can be truthful indicators of a competitor’s motives, intentions or goals or they can be bluffs. Bluffs are signals designed to mislead other firms into taking or not taking action to benefit the signaller. Discerning the difference between the two can often involve subtle

MARKET SIGNALS A market signal is any action by a competitor that provides direct or indirect indications of its intention, motives, goals or internal situation. Some signals are bluffs, some are warnings and some are serious commitments to a course of action. Market signals are indirect ways of communicating in the market place and can

SOURCES OF INFORMATION ABOUT COMPETITORS Decision making can be improved by an adequate supply of relevant information and a knowledge of good sources of information is an important first step. A suitable starting point is to examine what competitors say about themselves and what others say about them. Sources of information fall into four categories:

IDENTIFYING COMPETITORS The first step, however, is to identify the competition. This may seem a simple question for most firms to answer. For example, at first sight a book publisher’s main competitors might appear to be other book publishers. This is, of course, correct. However, product substitution also has to be considered. This involves looking

:Most industries include smaller firms that specialize in producing products or in offering services to specific sectors of the market, Most industries include smaller firms that specialize in producing products or in offering services to specific sectors of the market, i.e. in specific segments. In so doing they avoid the competitive thrusts of the larger

STRATEGY TYPOLOGIES While Porter’s typologies represent one important way of looking at how firms behave in the market place there are other ways of looking at what firms do. Various suggestions have been put forward to account for the strategies adopted by firms. A commonly adopted framework is to consider firms according to the role

Competitive strategy and profitability A question of considerable general interest relates to how a business can maximize its profitability, or at least become the most profitable performer in its industry. Maximum profitability can, in principle, only be achieved in one of two ways: either by minimizing costs or by maximizing prices. Thus any useful business

Threat of substitute products or services Substitutes, or alternative products that can perform the same function, impose limits on the price that an industry can charge for its products. The presence of substitutes is not obvious and may not be easily perceived by firms operating in an industry. Substitutes may even be preferred by customers