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Global Management Studies
GMS 200
Shavin Malhotra

Management Strategy Imp aspect of any org Help org beat competitiors Useful planning tools and techniques SWOT (strengths, weakness, opportunites, threats) – o strengths internal= manufacturing effiency, skilled workforce, market share, financing, rep o Weakness internal = Obsolete tech o Opp external = strong economy = huge growth rate o Threat external = new competitor, consumer more demanding Porter’s five forces model o Focuses on industry Highest rev 5aerospace and defence, 8health care: pharmacy, 7commercial banks, 10entertainment,6 food consumer products, network and comm., 4mining and crude-oil production,9 motor vehicles and parts, 2pharmaceuticals, 3railroads Least profit to rev ratio o Why industry? help design plan and strategy o Industry competition, customers, substitute products, suppliers, new entrants = if no these = no kind of industry in = better plan how reach position o Airline industry – highly competitive = strong rivalry = many competitors = low profitablity Bargaining power of consumers, since strong competition and compare prices with one airline with other Suppliers – not too many = better for suppliers and more competition with airlines = not good b/c not lot of option and prices are controlled and supplier can demand the price of material = controled Oil = fly on crude oil = makes competitive b/c prices controlled www.notesolution.com Management Strategy o Rivalry among competing firms – most strongest competive force Rivalry increase as; • # of competitors increase • Competitors become more equal in size = equal resource (manpower, money) • Product is a commodity and cant be differentiate = every product i the same with same beinfit and price (ex: salt and sugar = everyone sells same product) • Consumer demand is growing slowly = l essmore pressure on profit margin o Potential entry of new customers When firm can easily enter new industry, competition in that industry = low cost of entry (entertainment) = make highly competitive • Want to make it more difficult for competors by: o Barriers to entry: Large econmies of scale Need to gain tech and know how = tech sparse Strong brand preference = one that are there are up against strong brand loyalty and increase protoion and lose money to do that (ex: Coca Cola, Pepsi) = already huge market share = when enter new country they buy out any competition Large capital req Lack of adequeste distribution channels o Development of substitute products Industries with close completion w/producers of substitute products have higher competeition Ex: producers of eye glasses compete/ lenses and laser tech www.notesolution.com Management Strategy Ex: newspapers and tv compete w/ internet More pressure on pricing As pricing for substitute e products decline higher competitive pressure on the industry o Bargaining power of suppliers Very large suppliers = except prices or get out of business = cost of production very high (ex: airlines) Csot of switching raw materials is high (ex: dimond extraction is controlled by 2 major comp = anyone come in industry have to pay high cost) Possible options – backward integration = more control of raw materials (ex: steel extraction) o Bargaining power of consumers When consumers are large and buy in bulk they enjoy more power = negotiate for prices (ex: walmart = can by units from diff countries at China, india and sell at such a lower price) Bargaining power fo customers is also higher when • Product is standard or undifferentiated (ex:Apple • They can easily switch to competing brands • Sellers are struggling in the face of falling consumer demand = so sell at discount o RESHAPE THE FORCESIN YOUR FAVOR Use tactics designed specifically to reduce the share of profits leaking to other players To neutralize supplier, power, standardize specifications for parts so your company can witch more easily among vendors (if able to standardize) www.notesolution.com Management Strategy To counter power, expand your service so its harder for customers to leave you for a rival (ex: Rogrssells a lot of diff service, so don’t have to change all services) To temper price wars initiated by est rivals, invest more heavily in products that differ significantly f/ competitors offers To scare off new entrants, elevate the fixed costs of competing; for instance by escalating your R&D expenditure (ex: pharmasuticals) To limit the treat of substitutes, off better val through wider product accessablity. Soft drink produc
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