Porter 's Five Forces Model Of Competition

946 Words4 Pages
In my opinion the most important element of their strategy should be forming a trustworthy and positive relationship with their existing and potential customers. As Hennig-Thurau (2000) explains in such a competitive market the contact with customers is vital. There is a lot of arguments in the press relating to compensation for customers that were affected by the scandal, this is because they were sold a vehicle with false information and also will have lost value on their purchase due to the market value dropping (BBC, 2015). In their updated strategy that should be released next year, it is important they inform consumers how they are going to mend their relationships and bring back the trust. By offering a small amount of compensation to each vehicle owner affected it can make a massive difference to how they value the company. With it also being important to inform customers there are no other devices purposely administered on the cars. Porter 's five forces model of competition can be used to explore the micro-environment of an industry. Clegg et al (2011) describes the five forces model as a method of viewing the company 's competitive position in comparison to its competitors, while also showing the positive aspects that appeal to customers. It is vital when creating the new strategy that VW takes the competition model into consideration. This is because VW already have lost some of their market share as a result of the scandal meaning they need to research the best approach to competitors. The force that relates the most to VW is "The bargaining power of customers". As stated in Clegg et al (2011:60) 'customer demand is the main focus that determines the power of buyers '. The force means; customers looking to buy a ... ... middle of paper ... ...at have been found in this theory. An article by Aragon-Correa & Sharma (2003)describes the resource-based view as a theory that explains the competitive advantage the company has as a result of useful resources and capabilities. A resource is anything that a company owns or manages; this can include both physical and non-physical elements. All assets in the company are a resource, including the building, any land owned and raw materials. Also employees are considered a resource to the company as they bring experience, knowledge, training and skills to the job. This then leads to the competences of a firm, this is a group of resources and capabilities that when put together form an effective business process. Every firm has areas in which they are more competent in that others, this is why having a range of employees with different skills in an advantage to a firm.

More about Porter 's Five Forces Model Of Competition

Open Document