Term Paper on "Strategy Analysis of the Ideal Industry Environment"
Term Paper 3 pages (1130 words) Sources: 1+ Style: APA
[EXCERPT] . . . .
Strategy Analysis of the Ideal Industry EnvironmentIn defining the optimal industry environment for an organization to attain exceptional profitability and have the greatest likelihood of long-term growth, a scalable and agile framework is needed to organize all industry, environmental, market, legal, and political factors. For purposes of this paper, Porter's Five Forces Model is used as a framework for comparing the many forces that impact an organization, and in turn, those forces that organizations exert on its external environment. In the final analysis of an optimal industry environment must take into account the interchange of both organizations that comprise it and the broader industry factors that contribute to optimal performance over time. Relying on Porters' Five Forces Model not only organizes the industry factors but also illustrates how they interact with one another, which in the context of this paper, is used to show an optimal industry for long-term profitability, competitive advantage, and the sustaining strength of barriers to entry.
Porters' Five Forces Model
The five forces that comprise Dr. Porter's model are industry competitors, pressure for substitute products, bargaining power of suppliers, bargaining power of buyers, and the influence of potential entrants. Figure 1 shows the Porter Five Forces Model graphically (Porter 1990). Each of these areas is now discussed in bullet form in the following series of sections.
Competitive Rivalry
The ideal industry would have only a few competitors, each with significantly large customer bases that generated a significant proportion of revenu
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The business models of Oracle, SAP, and Microsoft resemble this attribute of the optimal industry in that each of these companies have enterprise software businesses that have had the longevity, pricing, and maintenance models that yield these types of revenue streams. The growth of open source, highly praised for its egalitarian approach to distribution, is actually prized more for its potential to erode the maintenance streams of these larger software companies by large customers who are questioning the value of yearly maintenance fees for their software. In the ideal or optimum industry the barriers to erosion of these maintenance and revenue streams would be impenetrable.
In an optimal industry the reliance on quality alone as the differentiator, created specifically in the context of manufacturing processes and a perfectly synchronized supply chain make the attainment of perfect orders commonplace. The perfect synchronization on orders, visibility into customer demand and the ability to source exactly what is needed from which supplier for each individual customers' exact needs, is a common best practice in the industry. There are no errors on highly customized engineer-to-order products as result and production efficiency on these highly customized product lines are comparable or even more efficient than traditional build-to-stock product lines.
As a result of the high level of accuracy and performance relating to highly customized, engineer-to-order products that are precisely aligned with the unique needs of each customer, switching costs are astronomical and customer loyalty is at 100% across all product lines. Each customer now feels and gets treated, from the initial product order to the finished and often highly customized product, like the only customer for the company. Loyalty skyrockets and switching costs do too.
Buyer Power
As there is a very high level of loyalty within the customer base, the number of customers gained through churn is minimal,… READ MORE
Quoted Instructions for "Strategy Analysis of the Ideal Industry Environment" Assignment:
“Please write a thorough and exhaustive description of the *****ideal industry environment***** within which you believe a firm would have the best change of earning *****above average,***** *****supernormal,***** or *****excess***** profits. That is , talk about how the industry forces would be configured to ensure maximum profitability for organizations within that industry ( Example: Very high entry barriers, such as required governmental approval, substantial capital outlay, substantially long product development cycles, etc. would discourage new entrants, etc.) Address all possible descriptions and explanations of an industry environment that would be most conducive to high profitability for industry participants.
How to Reference "Strategy Analysis of the Ideal Industry Environment" Term Paper in a Bibliography
“Strategy Analysis of the Ideal Industry Environment.” A1-TermPaper.com, 2007, https://www.a1-termpaper.com/topics/essay/strategy-analysis-ideal/80638. Accessed 5 Oct 2024.
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