our evaluation will include the I/O Model of Above Average returns and five forces model to isolate particular forces in the external environment that are potential threats. Porter identified these five factors that are major threats because they affect how much profit organizations competing within the same industry can expect to make. Write at least full one paragraph for each factor, explaining how it affects the company’s chance of making a profit.
The level of rivalry among organizations in an industry. The more that companies compete against one another for customers, by lowering the prices of their products or by increasing advertising-the lower is the level of industry profits (low prices mean less profit). (1 paragraph)
The potential for entry into an industry. The easier it is for companies to enter an industry because, for example, barriers to entry, such as brand loyalty, are low the more likely it is for industry prices and therefore industry profits to be low. (1 paragraph)
The power of suppliers. If there are only a few suppliers of an important input, then suppliers can drive up the price of that input, and expensive inputs result in lower profits for the producer. (1 paragraph)
The power of customers. If only a few large customers are available to buy an industrys output, they can bargain to drive down the price of that output. As a result, producers make lower profits. (1 paragraph)
The threat of substitute products. Often, the output of one industry is a substitute for the output of another industry (plastic may be a substitute for steel in some applications, for example; bottled water is a substitute for cola). Companies that produce a product with a known substitute cannot demand high prices for their products, and this constraint keeps their profits low. (1 paragraph)
Porter argued that when managers analyze opportunities and threats they should pay particular attention to these five forces because they are the major threats than an organization will encounter. It is the job of managers to formulate strategies to counter these threats and generate profits. (Jones and George)
Here is a quick and helpful video on Porter’s Five Forces to get your thought process started and organize your writing:
This is where you would list your recommendations. Recommendations would be based on your research and on your findings when you did the SWOT Analysis in Part 2. This is where the company needs improvement or can take advantage of changing business conditions. These are your recommendations; state no more than three. NEVER use first (“I”) or second person (“you”) in a case analysis. Use the third person (“they”). (1 page)
Every paper needs a conclusion. This is a summary of all three parts of your Case Analysis, including the Introduction (Part 1) and SWOT (Part 2). . The conclusion should revisit the key points or issues that you are trying to relate to the reader. Emphasize the positive by emphasizing the strengths and opportunities that have already been discussed. (1 page)
Don’t forget references!
As always, proofread and edit your work. Turnitin is used for this assignment. Once you submit your work, please look at the report that comes up, and make changes accordingly.