Porter believed that first your company must choose an industry that had low strength in al... ... middle of paper ... ...ely society” and Monitor filed for bankruptcy because it “failed to add value to customers.” The foundation supporting Monitor was the theory that you can increase company profits without gratifying buyers, but by keeping your suppliers, competition, and market as week and powerless as possible. The Five Forces theory places too much focus on selecting and crippling an industry and not enough on improving what your company is selling. Increasing forward and innovative thinking creates a strong competitive advantage and thus higher profits, not higher barriers. Change is the only constant. Without innovative strategies and fresh ideas, your company will be left behind.
PORTER’S FIVE FORCES MODEL 1. Rivalry Among Existing Competitors - (High) • Numerous and equally balanced competitors – As there are already large numbers of competitors in this industry, rivalry for better quality at a cheaper price is quite high. • Shorter Product Life-Cycle – As the technology is growing at a rapid pace, the life cycle of products has become relatively shorter. • High R&D costs – To come up with a better or a substitute product with better added features it requires great deal of investment in research and development which can be very risky because if the product fails then the costs incurred are sunk costs and cannot be recovered. • Imitation of technology – As the concept of reverse engineering has enabled everyone to imitate the technology that the rival company uses, it becomes a difficult task to maintain exclusivity and uniqueness.
Also when a customer comes searching for the customer details is very time consuming and sometimes the details are overlooked so new ones are made causing reputation. If a staff report is created to see who has sold most products can be done by the current system, but it can be very time consuming to go through every invoice. This means that these types of reports are not done despite the ability to do them no one does. The advantage of doing such a report would be to see who doesn’t sell as much so more motivation can be given. The current system also limits the functions you can do because when stock runs out it is hard to find out until sales rep comes looking for the product.
Employees must be let go at some point in time during the duration of the business as not everything is large or grand all at once. When business does poorly the CEOs are unable to pay some of the employees though the experience is different for each individual and sometimes the CEO must let go more than just what he thought. This detached decision is often considered heartless and unsympathetic, therefore connecting with a psychopathic trait. In addition to ruthless acts, competition is high when within the free market, and sometimes the CEO must tear them down. Ensuring the businesses survival is key to success, so when rivals come along that may put out businesses, the CEO has to be better to vanquish the threat.
The costing system provides information that is useful to managers for minimizing wastage and allocating resources to different departments. The traditional costing system is a costing system which calculates a single overhead rate and applies it to each job or department. This system has several flaws which make it outdated and ineffective in today’s business environment. One of the most important drawbacks of the traditional costing system is that it tends to over-emphasize on meeting standards such as price and efficiency without considering other important factors like quality, on-time delivery, and customer satisfaction because of which the products of other companies form better alternatives and pose a tough competition to the organization. It also stunts any scope for improvement or innovation as it is too focused on sticking to the set benchmarks.
While many factors greatly influence downsizing at a gr... ... middle of paper ... ...r new jobs and the lack of people to perform other jobs. Looking to the future needs to be continually stressed. Usually when a company downsizes, the results end up exactly the opposite of what they wanted, and it is usually because of the lack of planning. There are many issues involved in a corporate downsizing and with appropriate planning these issues can usually be resolved. While employees terminated usually get all the downfalls of a downsizing, the corporation had to downsize for a reason.
When competition is reduced consumers will suffer because prices would increase, the product selection decreases, and the quality of services will also decrease. “Free enterprise works because competition works. Big business, however, too often sees competition not as a chance to improve its products but as a threat to be legislated out of existence” (McMillian). For these reasons, that’s why Smith was opposed to government intervening with business.
Therefore, the potential for lawsuits to better the economy has always been there; but, the manipulation of it and overt claims of greed have corrupted its once noble intentions to decoy people into scrutinizing the legitimacy of every claim. Firms are continually churning out goods into the consumer market. However, with the advent of the lawsuit, great pressure has been imposed on companies to be more careful in terms of efficiency and especially safety with regards to goods and services. If a customer feels he has been cheated of his money and/or is simply dissatisfied with what he has paid for, than he has the right to file a lawsuit against the party responsible. Undoubtedly, such a case cost a hefty sum of money and 90 percent of the time the defendant loses; thus, giving businesses incentive to improve the quality or design of what they offer the consumer market so as to avoid troublesome and expensive court cases.
The challenge of taking a risk of putting your own money into the business and losing everything, or finding partners who will take a cut of your earnings. This challenge actually causes many owners not to go into business or fail from stari... ... middle of paper ... ...am and may face many challenges he is not familiar with that may cause disfunction in the business. Poor management team means poor execution. This can lead to loss of profits as the products being produced aren’t quickly being developed in time due to a lack of productivity. Productivity is a major challenge small startup businesses face.
Government regulations to help prevent monopolies can actually make it more difficult for small businesses to survive. People portray monopolies as greedy businesspeople who want to take all the money away from consumers. Despite that, people often forget that monopolies are still disciplined by market forces. It does not make sense for a monopoly to set prices so high that consumers cannot purchase the product or to create a useless product that no one will buy (“Monopolies,” 2015). This is an easily understandable, but quickly forgotten fact.