Competitive force is a factor influencing organisation’s contest within the industry and market (Business dictionary, 2009) Small and medium entrepreneurs can soundly demonstrate Porter’s principle of competition intensity. The basic consequences derive from the industry. The competitive force from both internally and externally contributes to performance (Liang et al., 2007). Direct consequence of the competitive force contributes to strategy making and organizational activities (Low and Cheng, 2006).
Porter’s Five Forces known as the strategic management model and the industry environment factors in competitive environment. As shown in Figure 3, the centre block depicts the intensity of competition among industry competitors. The external forces of new entrants, bargaining power of consumers and suppliers, and substitutes are shown as the threats acting on the industry.
An industry, selling prices can be forces up with high bargaining power if have lesser suppliers. On the other hand, buy prices can be the force down with higher provider if have more customers. The competency of new entries depends on the level of the existing manufacturers’ difficulties. Rivalry among existing firms – is a threat to existing manufacturers as the market shares will decrease. Also war price will lead to lower profits. Threat of substitute product –Traders are able to make buying-selling contracts in advanced by comparing they end or selection and approval vendor list in terms of the production competence, price, quality, and delivery ability.
The purpose of developing a model of environmental threats is to aid
managers in evaluating these threats so they can come to be greater success
in growth strategies to neutralize them. This five characteristics of corporate structure can threaten the ability of an company to both preserve or produce above-normal returns.
Risk Management functions adaptable to Five Forces Model and recognized as additional models which are involves replacing intra-industry rivalries and competitive threats with the Internal organization, Industry, Information, Infrastructure and Influences. ???
The external environment is complex, opportunities and threats have to be identified.
SWOT allows management to determine where resources want to be allocated to either shore up or scale back attributes to optimize program performance.
Strategic planning method to evaluate as Strengths is characteristics that give the business a competitive edge, Weaknesses is limitations or deficiencies of the business, Opportunities is chances to improve business performance, and Threats is external factors affecting the business that have the potential to hurt a firm’s business International standards (SWOT) analysis for requirements development
The value chain is comprised of the functions performed to create a product or service. A margin is depicted to highlight the value added for the customer. This would be a useful model for trade studies to represent alternative approaches and determine which produces the greatest margin or best value.
These analyses are influenced by the firm’s vision, mission and strategic actions.