Competitive Strategy And Advantage

686 Words3 Pages
1.5 Literature Review “The basic tool Porter offers manager in both Competitive Strategy and Competitive Advantage (1985) is his rule of the Five Forces that drive competition in any industry. The central element is the rivalry of existing competitors in the field, while orbiting around it are potential entrants, the threats of substitutes for products or services offered, and the bargaining power of suppliers and buyers. (Kennedy, 1994) The significance of any strengths and weakness a firm possesses is ultimately a function of its impact on relative cost or differentiation [which] in turn stem from industry structure, they result from a firm’s ability to cope with the five forces better than its rivals (Kennedy, 1994) 1. Threats of substitute products from competitors including product differentiation, prices performance of a substitutes and a buyer’s ability to switch to a substitute.(Investing Answers: Porters Five Forces) This has been relative in the pharmaceutical industry, one would find that there are more generic medicines on the market being produced and consumers are buying them. For example one would go to the pharmacy to purchase a Panado but instead would not find it in stock but would be recommended to buy a generic version which consists of more or less the same ingredients at a lower price. This ends up introducing the consumer to a less expensive alternative that is as effective as the original and that company that produces the generic medication gains competitive edge over the original manufacturer. But this rarely affects the more established companies that have a reputable background because as much as some consumers love bargains but there are still a lot more who are loyal buyers who demand for the cos... ... middle of paper ... ...sinesses’ margins and volumes, then it holds a lot power. Below are a few reasons that suppliers might gain power: • There are very few suppliers of a who manufacture that product or offer that service • There are no substitutes or generics • Switching to another (competitive) product is very expensive • The product is extremely important to buyers (they can’t do without it) • The industry supplying has a higher profitability than the industry buying. 1.7 Research Methodology This quest will be qualitative. Business owners will be identified and permission to interview them will be requested, questions will be set out and a colleague will be asked to do a trial interview just as mean of collecting more information and input. When permission for interviews is granted by all the consenting persons will be interviewed and all the information will be put into a report.
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