Industrial rivalry

Industrial rivalry

A company can create a competitive advantage by including the porter five forces.  The Porter five forces are an essential collection of resources that firms are keen at using based on the potential market gap that they are capable of creating within their industry. The five forces were primarily made to be used in the analysis of an industry before a company can take any action. Application of the resources in a company plays an integral role in the elevation of the companies’ position within their industry. The resources used by companies to be able to elevate their position in their industry comprise of; industrial rivalry, bargaining power, the threat of substitutes, supplier bargaining power as well as forces of new entrants into the industry. The usage of the major forces plays an instrumental role in the creation of a perfect position for a firm within the industry since it helps in the creation of competitive advantage(Hatten,2018). Hence, it is essential to include resources as part of the strategy.

Industrial rivalry

The position of any given company within an industry is affected by the number of competitors who operate in the same industry. There are several factors which are brought up by the competitors in the creation of threats; the factor includes; provision of high-quality products, lower pricing strategy as well as provision of offers. Those are some of the few factors which tend to affect the various ways through which a company operates within the competitive industrial domain. Increase in the number of competitors plays an integral role in ensuring that the industry becomes more robust, and this usually affects the company’s position in the industry. This trend is generally witnessed as the increase in the number of competitors affects the power of the company while on the other hand decrease in the number of competitors results to a creation of more power for the company. It is essential to carry out an analysis of the industrial rivalry because it plays an instrumental role in the creation of strategic paths that companies are supposed to follow to be able to create an absolute competitive advantage over the other competitors which are in the same industry.

The threat from new entrants

New entrants pose a significant threat, and this is a matter of concern for companies. This is an essential strategic resource which usually affects the company’s position within an industry. The issue of threat from new entrants is related to the company’s position within the market as well as the initial investment costs, which is involved in the whole process. If the value of is investments is high, then the market is likely to have a limited number of entrants. If the investment cost is lower, then the number of entrants in the industry will automatically reduce.

The power of the suppliers

The power of the suppliers is a major issue that is put into consideration by most of the companies. Power of the suppliers is an essential matter of concern because it is related to the underlying pricing strategy. The suppliers can influence the pricing of goods based on the price of the product that they provide in the market. Creation of a fair pricing strategy is beneficial to the companies in the long run.

Power of the customer

It is important to note that the power of the buyer is also an essential matter of concern in this perspective. Power of the buyer also affects the manner in which the company functions and the various ways through which the company performs its primary activities. The customers can reduce the prices of the services or commodities being offered by a company. Putting this factor into consideration helps in the creation of a better competitive base for companies operating in the same industry.

Threat from substitutes

It is also essential to consider the threat from substitutes in this perspective. Companies are supposed to be able to comprehend that substitutes tend to provide lower rates that tend to attract more customers, thus driving most of the customers from utilizing the services that are offered by the company. It is essential to consider the resource.

Competencies

Teamwork is an essential competency that helps in the creation of a perfect competitive base for the firm within the industry. Teamwork entails the coordination of all the employees in a company so that they may be able to fulfil the needs of the company and plays an integral role in the development of this competency. Teamwork in a company leads to the creation of a perfect industrial base by increasing the level of production within the company, thus ensuring that the company benefits. Promotion is the second competitive factor that is usually applied by companies to be able to create a perfect position within the industry. The action entails the creation of customer awareness program that familiarizes the customers with products as well as the services which are provided by the company in the market to be able to create a perfect competitive base over other companies which also offer similar goods and services.

Question two

Three barriers to entry

Barriers to entry refer to an economic term which describes the existence of high start-up costs or any other obstacles that is likely to deter or hinder new competitors from easily entering an area of business or an industry.

Government regulation

The first barrier to entry is Government regulation, and it usually affects the entry of most firms into a specific industry. In most cases, the government takes the initiative of introducing patents that are aimed at promoting a monopoly within the country in terms of the particular service sector. The issue mostly applicable to standard services, for instance, the main electricity distribution within the country. Creation of patent by the government plays an efficient role in the creation of barriers of entry that is most likely to cut out other companies which have the potential. Creation of patents is one of the most effective strategies that is applied by governments across the globe to be able to reduce competition and also focus on efficient service delivery to the citizens without consideration of the industry. Creation of patents by the government negatively affects the private sector because the companies would have to establish various strategies that would ensure that they are able to avoid such barriers.

Capital requirements

The second barrier to entry for most of the companies is capital. Capital is the initial investment is involved in the entry of a company within an industry is an essential matter of concern in this perspective. The activity works intending to ensure that service delivery is based on the customers’ preference. Nevertheless, having high costs of investments usually affects the position of the company negatively because the company cannot be able to penetrate the industry as desired.

Access to raw materials and channels of distribution

The third barrier to entry is the access to raw materials, and it plays an instrumental role in facilitating the development of monopolies in most of the countries. The high cost of distribution of products to the market as well as logistics and channels is one of the factors which largely contributes to the emergence of monopolies(Teague,2016). The issue of access to raw material and channels of distribution edges out most companies as a result of capital differences.

Question three

All the above mentioned are organizational activities which are utilized by companies in setting up priorities. They usually focus on energy as well as the resources that can be applied by the company to be able to strengthen its operations and also ensure that all employees work towards the attainment of a common goal regarding the future position of a firm. The activity entails setting up of agreements to ensure that the company can meet its objectives within a speculated time. It also emphasizes on the creation of a good position of the firm within the industrial domain. Effective planning helps in defining the future position that the company is likely to attain within the industrial domain. On the other hand, strategic thinking refers to the mental process applied by an individual to be able to achieve specific company goal. The issue is most applicable to the managers at the top level of a company regarding decisions that affect the company within the industry.

Application of strategic planning and strategic thinking is one of the most efficient strategies which could be used in the creation of a perfect position of the company within a given industry. Combination of the two approaches mentioned above helps in setting up of properties that allows the companies to be able to capitalize on them and also create a better position for the company within the industry that they operate within. Ideally, the combination of the two strategies is one of the most effective procedures that usually guarantees the success of the company within the industry that it operates within regarding the complications which are involved in the attainment of most of the company goals that are aligned with the companies’ future position. Experts advise the utilization of the approaches based on the effectiveness that they have towards the attainment of various company initiatives within the industry. Ideally, it facilitates major factors comprising of positioning as well as other effectual factors that deal with the basic company operations within their industry of operation.

References

Teague, M. (2016). Barriers to entry index: a ranking of starting a business difficulties for the United States. Journal of Entrepreneurship and Public Policy.

Hatten, T. S. (2018). Small Business Management: Creating a Sustainable Competitive Advantage. SAGE Publications.