Question

QUESTION 1 : Words: 350-400

Assume you are strategy expert of a company in your country.

a. Discuss how each of the Porter’s forces would affect/influence decision or strategy of your company.

b. Suggest how the company can create and sustain its competitive advantage.

Answer 1

Answer 1
Porters forces influences the decision and strategy of company in the following ways-
1. Bargaining power of suppliers- the bargaining power of suppliers influence the decision and strategy of the company because the number and size of the suppliers determine the decision the company take. It also depends upon the uniqueness of the suppliers product which shape the market. The unique quality of each suppliers product also helps in increasing the bargaining power of suppliers. The company making the decision also depends upon the the company's ability to to substitute its product in the market.
2. Bargaining power of buyers- the bargaining power of the bias influence the decision with the help of factors such as price sensitivity, the total number of customers in the market and size of each customer order.
3. Threat of substitute product- death threat of substitute product also influence the decision because the number of substitute products available help in determining the switching cost which is relative price performance of substitute.
4. Threat of new entrants- the threat of new entrants also influence the decision because they act as an barrier to entry. The other important factors in this include the brand loyalty of the product, capital required in the product and government policies which shape the threat of new entrants.
5. Rivalry among existing competitors- the rivalry among existing competitors influence the decision by analyzing the number of competitors and diversity of competitors, industry concentration barriers to exit, the difference in quality and the industry growth rate.

Answer 2
Company can create and sustain competitive advantage in following ways-
1. The product of the company must be unique in terms of its qualities and have unique signatures strength of its own.
2. In order to achieve and sustain competitive advantage that company must regularly perform value creating activities which are more valuable than the competitors.
3. One of the ways of creating competitive advantage is by having superior value as compared to competitors and selling the product at lower cost.

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