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 that a competitor may have given in the past before making changes can also help to reveal types of unconscious signal unique to that competitor.
QUESTIONS
1 Discuss the usefulness of Porter’s five forces model in helping an organization to develop its business strategies.
2 Porter argues that failure to make the choice between cost leadership and differentiation implies that a company is ‘stuck in the middle’, with no competitive advantage. How can this point of view be reconciled with the success of those firms which apply both of these strategic thrusts?
3 Differentiate between:
116 ANALYSING COMPETITION
(a) market leader (b) market challenger (c) market follower (d) market nicher
and discuss the various strategies which might be pursued by each one of the four categories.
4 How might a firm set about trying to collect information on a continuous basis about its competitors?
5 Discuss the usefulness of market signals in the context of trying to understand competitors’ moves.
CASE STUDIES
Cyproswim Ltd
A brief history of the company
Even if the swimming pool industry in the US and in Europe has a long history, in Cyprus there were no swimming pools until 1967. The first pools that have been constructed were those of the Ledra Palace (Nicosia), Hilton (Nicosia) and Forest Park (Limassol) hotels, between 1966 and 1967. However, there was no specialized business responsible for the construction and maintenance of swimming pools. Construction of the pools mentioned above was undertaken by air-conditioning businesses.
In the intervening period, the significant increase in tourism has created the need for more hotels to be built. A hotel is now considered not only as a place where people can stay, but also a place of pleasure and entertainment. Moreover, in Cyprus, a swimming pool in a hotel is an essential feature. Fully equipped hotels have played an important role in the increase of tourism and the development of Cyprus’s economy.