(Mt) – SEU Factors a Decision Maker Uses to Identify Strategic Factors

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I’m working on a management multi-part question and need an explanation and answer to help me learn.
1. How can a decision maker identify strategic factors in a corporation’s external international environment? 
2. Discuss the relationship between corporate governance and social responsibility? Give exles. 
B. Critical thinking
Review the figure 4-3, p.110 from your textbook and answer the following questions:
1. Choose any exle of industry from the real national or international market, and detail Porters’ five forces framework with a graphic representation.  
2.  According to Porter’s framework, what determines the level of competitive intensity in your chosen industry? 
3. Assess the threat of new entrants, and substitute products/ services for your chosen industry.  
4.  Is your chosen industry attractive for investment? Why or why not?    

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110 PART 2 Scanning the Environment PORTER’S APPROACH TO INDUSTRY ANALYSIS Michael Porter, an authority on competitive strategy, contends that a corporation is most con- cerned with the intensity of competition within its industry. The level of this intensity is deter- mined by basic competitive forces, as depicted in Figure 4-3. “The collective strength of these forces,” he contends, “determines the ultimate profit potential in the industry, where profit po- tential is measured in terms of long-run return on invested capital.”? In carefully scanning its industry, a corporation must assess the importance to its success of each of six forces: threat of new entrants, rivalry among existing firms, threat of substitute products or services, bar- gaining power of buyers, bargaining power of suppliers, and relative power of other stakehold- ers. The stronger each of these forces, the more limited companies are in their ability to raise prices and earn greater profits. Although Porter mentions only five forces, a sixth-other stakeholders-is added here to reflect the power that governments, local communities, and other groups from the task environment wield over industry activities. Using the model in Figure 4-3, a high force can be regarded as a threat because it is likely to reduce profits. A low force, in contrast, can be viewed as an opportunity because it may al- low the company to earn greater profits. In the short run, these forces act as constraints on a company’s activities. In the long run, however, it may be possible for a company, through its choice of strategy, to change the strength of one or more of the forces to the company’s advan- tage. For exle, Dell’s early use of the Internet to market its computers was an effective way to negate the bargaining power of distributors in the PC industry. A strategist can analyze any industry by rating each competitive force as high, medium, or low in strength. For exle, the global athletic shoe industry could be rated as follows: FIGURE 4-3 Forces Driving Industry Competition Potential Entrants Threat of New Entrants Relative Power of Unions, Governments, Special Interest Groups, etc. Other Stakeholders Industry Competitors Bargaining Power of Buyers Buyers Suppliers Rivalry Among Existing Firms Bargaining Power of Suppliers Threat of Substitute Products or Services Substitutes SOURCE: Reprinted with the permission of The Free Press, A Division of Simon #038; Schuster, from COMPETITIVE ADVANTAGE: Techniques for Analyzing Industries and Competitors by Michael E. Porter Copyright © 1980, 1988 by The Free Press. All rights reserved.

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