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Business Strategy Questions / Value Chain Analysis - Essay Example
The competitive forces analysis is concerned with the external environment and the various stakeholders of the firm. According to Porter, there are five competitive forces in the environment of a business entity namely the suppliers, buyers, customers, potential entrants, and product substitutes…
Strategic moves in countering rivalry are by changing prices, improving product differentiation, creatively using distribution channels, and exploiting relationship with suppliers.
Buyer power also has significant implications on the operation of a business entity. Accordingly, buyers are strong if they are concentrated; they purchase a significant purchase of output: and posses a credible backward integration threat.
Suppliers are other important stakeholders. Like buyers, stakeholders are strong if they are concentrated; have credible forward integration threat; there is significant cost to switch to other suppliers; and ironically, if their customers are strong.
Barriers to entry or exit are determined by specific factors like government regulations, existence of patents or proprietary knowledge, required specific assets, and organizational economies of scale. Entry is relatively easier if the industry requires common technology, little brand franchise, access to distribution channel, and low scale threshold. Exit is easy if assets are salable, exit costs are insignificant, and when business is independent.
The concept of environment analysis will be briefly applied to Vodafone Group PLC. ...