The document summarizes the challenging business environment faced by airline managers. It notes that since 2001, the airline industry has been characterized by volatile demand and intense competition from low-cost carriers. Consumers select carriers based on lowest price, putting downward pressure on pricing. Additionally, airline costs are closely tied to unpredictable fuel prices. Labor unions also drive up costs. As a result of these conditions, many major airlines struggled financially between 2001 and 2004.
The document discusses the social responsibilities of businesses to various stakeholders. Businesses depend on society for money, labor, skills, and markets. Social responsibility refers to a business's obligation to protect and improve society's welfare as well as its own interests. The key social responsibilities of businesses are to owners, employees, consumers, the community, and the government. This includes providing fair wages and working conditions for employees, quality products at reasonable prices for consumers, preventing pollution and supporting community development, and complying with government regulations.
The document discusses key concepts related to business, government, society and their relationships. It begins by defining business, government and society. It then discusses different models of the relationship between business, government and society - the Market Capitalism Model, Dominance Model, Countervailing Forces Model and Stakeholder Model. It also covers related concepts like business ethics, triple bottom line, corporate social responsibility and CSR laws in India.
The document discusses the social role and responsibilities of businesses. It defines social responsibility as any obligation a business has towards society. Businesses have responsibilities to various stakeholders like investors, customers, employees and society. Regarding society, businesses should help weaker sections, promote social values, generate jobs, protect the environment and support development. The document also discusses fair employment practices businesses should follow like non-discriminatory recruitment, fair treatment, equal training opportunities, fair compensation and compliance with labor laws. Finally, it outlines the roles of a personnel manager in ensuring employee welfare.
In what ways stakeholders related to business activities. Give examples of stakeholders
Differentiate between primary and secondary stakeholders in a business situation. Give examples of each by selecting companies known to you.
Illustrate what are the examples around you from your observation or read where companies that act in irresponsible manner towards the society/stakeholders. Give examples
What opportunities and challenges does business encounter with the stakeholders in their day to day relationship?
Sustainable development – meaning, social, economic and
environmental dimensions, principles of sustainable
development. Environment management systems – meaning,
scope, objectives, planning and implementation; ISO 14000;
environmental audit; 4Rs; environmental labeling. World
Business Council for Sustainable Development. Millennium
Development Goals and Sustainable
Development Goals – the role of and implications for business
Corporate social responsibility (CSR) is defined as businesses behaving ethically and contributing to economic development while improving quality of life for employees, local communities, and society. Businesses depend on society for infrastructure, workforce, consumers, and more, so they have a responsibility to give back. CSR can be implemented through adopting strong values, generating stakeholder intelligence, and responding positively to stakeholder issues. It provides benefits like improved reputation, sales, employee retention, and risk management. CSR addresses issues like community assistance, health/welfare, education, human rights, and the environment. Responsibilities include product quality, reasonable prices, ethical advertising, and supporting community programs.
The document discusses the social responsibilities of businesses to various stakeholders. Businesses depend on society for money, labor, skills, and markets. Social responsibility refers to a business's obligation to protect and improve society's welfare as well as its own interests. The key social responsibilities of businesses are to owners, employees, consumers, the community, and the government. This includes providing fair wages and working conditions for employees, quality products at reasonable prices for consumers, preventing pollution and supporting community development, and complying with government regulations.
The document discusses key concepts related to business, government, society and their relationships. It begins by defining business, government and society. It then discusses different models of the relationship between business, government and society - the Market Capitalism Model, Dominance Model, Countervailing Forces Model and Stakeholder Model. It also covers related concepts like business ethics, triple bottom line, corporate social responsibility and CSR laws in India.
The document discusses the social role and responsibilities of businesses. It defines social responsibility as any obligation a business has towards society. Businesses have responsibilities to various stakeholders like investors, customers, employees and society. Regarding society, businesses should help weaker sections, promote social values, generate jobs, protect the environment and support development. The document also discusses fair employment practices businesses should follow like non-discriminatory recruitment, fair treatment, equal training opportunities, fair compensation and compliance with labor laws. Finally, it outlines the roles of a personnel manager in ensuring employee welfare.
In what ways stakeholders related to business activities. Give examples of stakeholders
Differentiate between primary and secondary stakeholders in a business situation. Give examples of each by selecting companies known to you.
Illustrate what are the examples around you from your observation or read where companies that act in irresponsible manner towards the society/stakeholders. Give examples
What opportunities and challenges does business encounter with the stakeholders in their day to day relationship?
Sustainable development – meaning, social, economic and
environmental dimensions, principles of sustainable
development. Environment management systems – meaning,
scope, objectives, planning and implementation; ISO 14000;
environmental audit; 4Rs; environmental labeling. World
Business Council for Sustainable Development. Millennium
Development Goals and Sustainable
Development Goals – the role of and implications for business
Corporate social responsibility (CSR) is defined as businesses behaving ethically and contributing to economic development while improving quality of life for employees, local communities, and society. Businesses depend on society for infrastructure, workforce, consumers, and more, so they have a responsibility to give back. CSR can be implemented through adopting strong values, generating stakeholder intelligence, and responding positively to stakeholder issues. It provides benefits like improved reputation, sales, employee retention, and risk management. CSR addresses issues like community assistance, health/welfare, education, human rights, and the environment. Responsibilities include product quality, reasonable prices, ethical advertising, and supporting community programs.
The document discusses various topics related to business and society, including objectives of business, social responsibility of business, social audit, the role of government in business, and corporate governance. It provides details on the responsibilities of business to shareholders, employees, consumers, and community. It also examines factors influencing the social orientation of businesses and different views on the level of social involvement.
The document discusses the social responsibilities of businesses. It defines social responsibility as businesses considering the impact of their activities on society in decision making. Businesses have responsibilities to customers, employees, the environment, investors, suppliers, competitors, government, and society. They should support communities, self regulate, and conduct social audits to ensure they meet their social obligations.
Corporate social responsibility is defined as a business's commitment to operate ethically and contribute to economic development while improving life for its workforce and local community. It is a voluntary initiative for businesses to contribute to a better society and greener environment. CSR expectations include that businesses behave ethically, contribute to economic growth, and improve life for employees, communities, and society.
This document discusses corporate social responsibility (CSR) and provides context around its history and importance. It defines a corporation and outlines how corporations historically served the public good but later focused solely on profits. It then describes the adverse effects of corporations on workers, human health, animals, and the biosphere. The document explains how the new Indian Companies Act requires large companies to allocate 2% of profits to CSR initiatives in education, healthcare, sanitation, and the environment. Finally, it discusses benefits of CSR to society, employees, and corporations, but also notes CSR could potentially be misused.
Social Responsibilities of business & business ethicsVarsha Dubey
This document discusses the social responsibility of business. It defines social responsibility as business decisions and actions that are desirable to society. It provides arguments both for and against social responsibility, such as justifying a business's existence and avoiding government regulation as reasons for, and violating profit goals and burdening consumers as reasons against. The document also covers the different types of social responsibility businesses have and how they relate to stakeholders, as well as the role of businesses in environmental protection and the importance of business ethics.
Corporate Social Responsibility is defined as a form of self-regulation where businesses monitor their adherence to law, ethics, and social norms. Businesses embrace responsibility for their impacts on stakeholders like the environment, customers, employees and communities. Potential benefits include improved human resources, risk management, brand differentiation and license to operate. However, critics argue that CSR may distract from profit-making or be used for commercial benefit rather than social good.
This document discusses the marketing environment and its impact on organizations. It identifies two types of marketing environment - micro and macro. Micro environment includes company, suppliers, marketing intermediaries, customers, competitors, and public. Macro environment includes economic, technological, social/cultural, demographic, political/legal, and natural forces. The document provides examples to illustrate how each of these micro and macro factors can influence organizational marketing and strategy. It emphasizes the importance of monitoring changes in the external environment to help organizations adapt their business opportunities accordingly.
Corporate Social Responsibility (CSR) Aadhil Ahmed
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship or responsible business) is a form of corporate self-regulation integrated into a business model.
This document provides an overview of corporate social responsibility (CSR) in India. It discusses the evolution of CSR in India, including key government policies and the 2013 Companies Act which mandates that large companies spend 2% of profits on CSR activities. It also outlines definitions of CSR, benefits of CSR programs, and requirements for CSR committees and reporting under the Companies Act. Analysis of disclosures from over 1,270 companies found that total CSR spending in 2016-17 increased 27% from the previous year and was 92% of the amount required under the 2% mandate.
Corporate social responsibility (CSR) involves businesses operating ethically and contributing to economic development while improving lives. CSR definitions emphasize behaving ethically, meeting legal and public expectations, and contributing to sustainability. Recent corporate frauds show that profit alone can enable unethical practices, so CSR considers all stakeholders. Engaging in CSR can improve financial performance, reduce reputational risk, enhance brand image through positive PR, increase customer loyalty, improve culture and staff recruitment/retention, improve government relations, and help multinationals overcome issues with new markets.
The document discusses the social responsibility of businesses. It outlines responsibilities to various stakeholders like owners and investors, creditors, employees, suppliers, customers, and society and environment. Responsibilities include running the business efficiently, treating all stakeholders fairly, providing good working conditions, quality products at reasonable prices, complying with laws, and supporting community development.
The document discusses the marketing environment and how it consists of internal and external factors that affect a company's ability to serve its customers. It describes the microenvironment as being close actors like suppliers, marketing intermediaries, customers and competitors. The macro environment includes larger societal forces like demographic, economic, natural, technical, political and cultural factors that influence opportunities and threats beyond a company's control.
Corporate social responsibility in multi national companies(CSR)kdore
The document discusses corporate social responsibility (CSR) in multinational companies. It defines CSR and multinational companies, outlines the types and main concerns of CSR. The document also examines the advantages of CSR for multinationals, such as improved reputation and financial performance, and the potential disadvantages, like increased costs. Examples of CSR activities by multinational companies like Unilever and IBM are provided. In conclusion, the document states that CSR has become an important part of business and can benefit companies through sustainability and meeting social expectations, though some issues with engagement remain.
Corporate social responsibility in agribusiness firmsGowri Balah
CSR in agribusiness firms aims to increase transparency, assure consumers of healthier nutrition, and prevent loss of reputation. Agribusiness companies must be aware that stakeholders' attitudes can vary globally regarding issues like GMOs and labor rights. The position in the value chain also influences CSR implementation, as retailers can require CSR standards of direct suppliers. CSR in agribusiness includes ethical, philanthropic, environmental, and economic responsibilities to balance business, social, and environmental practices. Effective CSR fosters local involvement, commitment to partner with communities, and stable social environments for long-term investment and trade.
This document provides an overview of corporate social responsibility (CSR) including definitions of CSR, different views on CSR, and arguments for and against CSR. It defines CSR as a voluntary commitment by companies to behave ethically and improve quality of life for stakeholders. There are two main views on CSR - the shareholder view that a company's only responsibility is to maximize shareholder wealth, and the stakeholder view that companies should treat all stakeholders with dignity. The document also discusses whether companies should be involved in CSR and outlines some pros and cons of CSR engagement.
The document defines and describes the key elements of a company's marketing environment. It discusses both the microenvironment, consisting of actors in close proximity like suppliers and customers, and the macroenvironment, consisting of larger societal forces. These include demographic factors like population size and age; economic conditions like income levels and inflation; the physical environment of natural resources; socio-cultural aspects like beliefs and subcultures; technological changes; and the political/legal landscape of laws and regulations. Understanding these internal and external influences is important for marketers to develop successful strategies.
The document discusses corporate social responsibility (CSR), defining it as companies showing concern for sustainability and development through self-regulated programs. CSR benefits society through philanthropic and volunteer efforts while boosting brands. Companies implement CSR to fulfill long-term self-interest, establish public image, avoid misuse of resources, minimize environmental damage, and benefit economic and social welfare. CSR helps companies improve community relations, increase branding and build image while minimizing negative impacts and creating shared wealth. Benefits of CSR include attracting and retaining staff, green investment, ethical customers, cost reductions, and long-term profitability.
This document discusses various models and perspectives on corporate social responsibility (CSR). It begins with an overview of CSR and definitions. It then examines five models of CSR: minimalist, self-interested, social contract, stakeholder management, and stakeholder stewardship. Each model is defined in terms of its premises and critiques of alternative models. Examples are provided for each model. The document also discusses the relationship between CSR and ethics, and managing ethics and social responsibility in organizations.
The document discusses the macroenvironment and its importance for marketing strategies. The macroenvironment consists of six key factors - demographic, economic, cultural, natural, technological, and legal - that shape opportunities and pose threats. These factors include population trends, technology changes, economic conditions, and natural environment issues. Understanding the macroenvironment is important for a SWOT analysis and adapting to constant changes in the larger environment that are outside a company's control.
Nike faced criticism for sweatshop labor and poor working conditions at its overseas factories. It responded by implementing an ethical code of conduct, commissioning an independent study of its factories, creating a social responsibility department, and donating money to charity. The document discusses various criticisms of marketing practices such as deceptive advertising, high-pressure sales tactics, producing unsafe products, and neglecting disadvantaged consumers. It also covers topics like environmental sustainability, corporate social responsibility, and businesses' responsibilities to society.
This document discusses Porter's five forces model of competitive strategy. It provides details on each of the five competitive forces: the threat of new entry, competitive rivalry, threat of substitution, bargaining power of suppliers, and bargaining power of customers. It explains how these forces shape industry competition and profitability. The document also discusses Michael Porter's development of the five forces framework and how it can be used to analyze industries and improve a firm's competitive position.
1) The document discusses Porter's five forces model for analyzing industry competition. The five competitive forces are the threat of new entrants, rivalry among existing competitors, bargaining power of buyers, bargaining power of suppliers, and threat of substitute products.
2) Within Porter's framework, strong competitive forces are threats that depress profits while weak forces are opportunities to earn greater profits.
3) The document provides details on each of the five competitive forces, how to assess their strength, and their implications for industry competition and company profitability.
The document discusses various topics related to business and society, including objectives of business, social responsibility of business, social audit, the role of government in business, and corporate governance. It provides details on the responsibilities of business to shareholders, employees, consumers, and community. It also examines factors influencing the social orientation of businesses and different views on the level of social involvement.
The document discusses the social responsibilities of businesses. It defines social responsibility as businesses considering the impact of their activities on society in decision making. Businesses have responsibilities to customers, employees, the environment, investors, suppliers, competitors, government, and society. They should support communities, self regulate, and conduct social audits to ensure they meet their social obligations.
Corporate social responsibility is defined as a business's commitment to operate ethically and contribute to economic development while improving life for its workforce and local community. It is a voluntary initiative for businesses to contribute to a better society and greener environment. CSR expectations include that businesses behave ethically, contribute to economic growth, and improve life for employees, communities, and society.
This document discusses corporate social responsibility (CSR) and provides context around its history and importance. It defines a corporation and outlines how corporations historically served the public good but later focused solely on profits. It then describes the adverse effects of corporations on workers, human health, animals, and the biosphere. The document explains how the new Indian Companies Act requires large companies to allocate 2% of profits to CSR initiatives in education, healthcare, sanitation, and the environment. Finally, it discusses benefits of CSR to society, employees, and corporations, but also notes CSR could potentially be misused.
Social Responsibilities of business & business ethicsVarsha Dubey
This document discusses the social responsibility of business. It defines social responsibility as business decisions and actions that are desirable to society. It provides arguments both for and against social responsibility, such as justifying a business's existence and avoiding government regulation as reasons for, and violating profit goals and burdening consumers as reasons against. The document also covers the different types of social responsibility businesses have and how they relate to stakeholders, as well as the role of businesses in environmental protection and the importance of business ethics.
Corporate Social Responsibility is defined as a form of self-regulation where businesses monitor their adherence to law, ethics, and social norms. Businesses embrace responsibility for their impacts on stakeholders like the environment, customers, employees and communities. Potential benefits include improved human resources, risk management, brand differentiation and license to operate. However, critics argue that CSR may distract from profit-making or be used for commercial benefit rather than social good.
This document discusses the marketing environment and its impact on organizations. It identifies two types of marketing environment - micro and macro. Micro environment includes company, suppliers, marketing intermediaries, customers, competitors, and public. Macro environment includes economic, technological, social/cultural, demographic, political/legal, and natural forces. The document provides examples to illustrate how each of these micro and macro factors can influence organizational marketing and strategy. It emphasizes the importance of monitoring changes in the external environment to help organizations adapt their business opportunities accordingly.
Corporate Social Responsibility (CSR) Aadhil Ahmed
Corporate social responsibility (CSR, also called corporate conscience, corporate citizenship or responsible business) is a form of corporate self-regulation integrated into a business model.
This document provides an overview of corporate social responsibility (CSR) in India. It discusses the evolution of CSR in India, including key government policies and the 2013 Companies Act which mandates that large companies spend 2% of profits on CSR activities. It also outlines definitions of CSR, benefits of CSR programs, and requirements for CSR committees and reporting under the Companies Act. Analysis of disclosures from over 1,270 companies found that total CSR spending in 2016-17 increased 27% from the previous year and was 92% of the amount required under the 2% mandate.
Corporate social responsibility (CSR) involves businesses operating ethically and contributing to economic development while improving lives. CSR definitions emphasize behaving ethically, meeting legal and public expectations, and contributing to sustainability. Recent corporate frauds show that profit alone can enable unethical practices, so CSR considers all stakeholders. Engaging in CSR can improve financial performance, reduce reputational risk, enhance brand image through positive PR, increase customer loyalty, improve culture and staff recruitment/retention, improve government relations, and help multinationals overcome issues with new markets.
The document discusses the social responsibility of businesses. It outlines responsibilities to various stakeholders like owners and investors, creditors, employees, suppliers, customers, and society and environment. Responsibilities include running the business efficiently, treating all stakeholders fairly, providing good working conditions, quality products at reasonable prices, complying with laws, and supporting community development.
The document discusses the marketing environment and how it consists of internal and external factors that affect a company's ability to serve its customers. It describes the microenvironment as being close actors like suppliers, marketing intermediaries, customers and competitors. The macro environment includes larger societal forces like demographic, economic, natural, technical, political and cultural factors that influence opportunities and threats beyond a company's control.
Corporate social responsibility in multi national companies(CSR)kdore
The document discusses corporate social responsibility (CSR) in multinational companies. It defines CSR and multinational companies, outlines the types and main concerns of CSR. The document also examines the advantages of CSR for multinationals, such as improved reputation and financial performance, and the potential disadvantages, like increased costs. Examples of CSR activities by multinational companies like Unilever and IBM are provided. In conclusion, the document states that CSR has become an important part of business and can benefit companies through sustainability and meeting social expectations, though some issues with engagement remain.
Corporate social responsibility in agribusiness firmsGowri Balah
CSR in agribusiness firms aims to increase transparency, assure consumers of healthier nutrition, and prevent loss of reputation. Agribusiness companies must be aware that stakeholders' attitudes can vary globally regarding issues like GMOs and labor rights. The position in the value chain also influences CSR implementation, as retailers can require CSR standards of direct suppliers. CSR in agribusiness includes ethical, philanthropic, environmental, and economic responsibilities to balance business, social, and environmental practices. Effective CSR fosters local involvement, commitment to partner with communities, and stable social environments for long-term investment and trade.
This document provides an overview of corporate social responsibility (CSR) including definitions of CSR, different views on CSR, and arguments for and against CSR. It defines CSR as a voluntary commitment by companies to behave ethically and improve quality of life for stakeholders. There are two main views on CSR - the shareholder view that a company's only responsibility is to maximize shareholder wealth, and the stakeholder view that companies should treat all stakeholders with dignity. The document also discusses whether companies should be involved in CSR and outlines some pros and cons of CSR engagement.
The document defines and describes the key elements of a company's marketing environment. It discusses both the microenvironment, consisting of actors in close proximity like suppliers and customers, and the macroenvironment, consisting of larger societal forces. These include demographic factors like population size and age; economic conditions like income levels and inflation; the physical environment of natural resources; socio-cultural aspects like beliefs and subcultures; technological changes; and the political/legal landscape of laws and regulations. Understanding these internal and external influences is important for marketers to develop successful strategies.
The document discusses corporate social responsibility (CSR), defining it as companies showing concern for sustainability and development through self-regulated programs. CSR benefits society through philanthropic and volunteer efforts while boosting brands. Companies implement CSR to fulfill long-term self-interest, establish public image, avoid misuse of resources, minimize environmental damage, and benefit economic and social welfare. CSR helps companies improve community relations, increase branding and build image while minimizing negative impacts and creating shared wealth. Benefits of CSR include attracting and retaining staff, green investment, ethical customers, cost reductions, and long-term profitability.
This document discusses various models and perspectives on corporate social responsibility (CSR). It begins with an overview of CSR and definitions. It then examines five models of CSR: minimalist, self-interested, social contract, stakeholder management, and stakeholder stewardship. Each model is defined in terms of its premises and critiques of alternative models. Examples are provided for each model. The document also discusses the relationship between CSR and ethics, and managing ethics and social responsibility in organizations.
The document discusses the macroenvironment and its importance for marketing strategies. The macroenvironment consists of six key factors - demographic, economic, cultural, natural, technological, and legal - that shape opportunities and pose threats. These factors include population trends, technology changes, economic conditions, and natural environment issues. Understanding the macroenvironment is important for a SWOT analysis and adapting to constant changes in the larger environment that are outside a company's control.
Nike faced criticism for sweatshop labor and poor working conditions at its overseas factories. It responded by implementing an ethical code of conduct, commissioning an independent study of its factories, creating a social responsibility department, and donating money to charity. The document discusses various criticisms of marketing practices such as deceptive advertising, high-pressure sales tactics, producing unsafe products, and neglecting disadvantaged consumers. It also covers topics like environmental sustainability, corporate social responsibility, and businesses' responsibilities to society.
This document discusses Porter's five forces model of competitive strategy. It provides details on each of the five competitive forces: the threat of new entry, competitive rivalry, threat of substitution, bargaining power of suppliers, and bargaining power of customers. It explains how these forces shape industry competition and profitability. The document also discusses Michael Porter's development of the five forces framework and how it can be used to analyze industries and improve a firm's competitive position.
1) The document discusses Porter's five forces model for analyzing industry competition. The five competitive forces are the threat of new entrants, rivalry among existing competitors, bargaining power of buyers, bargaining power of suppliers, and threat of substitute products.
2) Within Porter's framework, strong competitive forces are threats that depress profits while weak forces are opportunities to earn greater profits.
3) The document provides details on each of the five competitive forces, how to assess their strength, and their implications for industry competition and company profitability.
The document discusses the five forces framework for analyzing industry competition. It describes the five competitive forces as the intensity of rivalry among existing competitors, the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products. The framework suggests that the stronger these competitive forces are, the more difficult it is for firms in the industry to earn above-average returns. Various factors are identified that influence the strength of each competitive force.
The document discusses Porter's five forces model of industry analysis. It describes the five competitive forces that shape industry competition and their implications for business strategy and profitability. Specifically, it covers the threats of new entrants, power of suppliers and buyers, threat of substitutes, and intensity of rivalry among existing competitors. It also discusses how these forces vary across industry life cycle stages and strategic groups within industries.
Senior Seminar in Business AdministrationBUS499 Strategic Ma.docxklinda1
Senior Seminar in Business Administration
BUS499
Strategic Management and Strategic Competitiveness
Welcome to the Government Contract Law.
In this lesson we will discuss Strategic Management and Strategic Competitiveness.
Please go to the next slide.
Objectives
Upon completion of this lesson, you will be able to:
Identify the vision, mission, and stakeholders of a firm
When you complete this lesson you will be able to:
Identify the vision, mission, and stakeholders of a firm.
Please go to the next slide.
Supporting Topics
The Competitive Landscape
The I/O Model of Above Average-Returns
The Resource-Based Model of Above Average-Returns
Vision and Mission
Stakeholders
Strategic Leaders
The Strategic Management Process
In order to achieve this objective, the following supporting topics will be covered:
The competitive landscape;
The I/O model of above average-returns;
The resource-based model of above average-returns;
Vision and mission;
Stakeholders;
Strategic leaders; and
The strategic management process.
Please go to the next slide.
The Competitive Landscape
Competition is Changing
Money is scare
Markets are becoming volatile
Firms effectively using the strategic management process
Hypercompetition
Challenge competitors
Competition between many of the world’s industries is changing. Many of these industries are competing due to money being scare and markets becoming volatile. Boundaries that once seemed drawn between industries are becoming blurred. An example of this challenge would be the advances in interactive computer networks and telecommunications. These advancements have entered into the realm of the entertainment industry. We also see that many partnerships in the entertainment industry further blur the boundaries of the industry. In order to be successful and maintain a competitive edge, managers must adopt new strategies to stay current with the evolving conditions.
Many firms effectively use the strategic management process to help reduce the likelihood of failure with various challenges they may encounter.
Hypercompetition is a term often used to illustrate the competitive landscape. The conditions of hypercompetition assume that market stability is replaced by notions of inherent instability and change.
Hypercompetition results from the dynamics of strategic maneuvering among global and innovative combatants. It is a condition of rapidly escalating competition based on the following:
Price quality positioning;
Competition to create new know-how and establish first mover advantage; and
Competition to protect or invade established product or geographic markets.
In a hypercompetitive market, firms will want to challenge their competitors with the end goal of improving their competitive position and performance. The emergence of a global economy and technology along with specifically rapid technological changes are the two primary elements of hypercompetitive environments and help create to.
Awareness of the fi ve forces can help a company understand thkacie8xcheco
Awareness of the fi ve forces can help a company understand the structure of its
industry and stake out a position that is more profi table and less vulnerable to attack.
78 Harvard Business Review | January 2008 | hbr.org
1808 Porter.indd 781808 Porter.indd 78 12/5/07 5:33:57 PM12/5/07 5:33:57 PM
P
et
er
C
ro
w
th
er
Editor’s Note: In 1979, Harvard Business Review
published “How Competitive Forces Shape Strat-
egy” by a young economist and associate professor,
Michael E. Porter. It was his fi rst HBR article, and it
started a revolution in the strategy fi eld. In subsequent
decades, Porter has brought his signature economic
rigor to the study of competitive strategy for corpora-
tions, regions, nations, and, more recently, health care
and philanthropy. “Porter’s fi ve forces” have shaped a
generation of academic research and business practice.
With prodding and assistance from Harvard Business
School Professor Jan Rivkin and longtime colleague
Joan Magretta, Porter here reaffi rms, updates, and
extends the classic work. He also addresses common
misunderstandings, provides practical guidance for
users of the framework, and offers a deeper view of
its implications for strategy today.
THE FIVE
COMPETITIVE
FORCES THAT
by Michael E. Porter
hbr.org | January 2008 | Harvard Business Review 79
SHAPE
IN ESSENCE, the job of the strategist is to under-
STRATEGYSTRATEGY
stand and cope with competition. Often, however,
managers defi ne competition too narrowly, as if
it occurred only among today’s direct competi-
tors. Yet competition for profi ts goes beyond es-
tablished industry rivals to include four other
competitive forces as well: customers, suppliers,
potential entrants, and substitute products. The
extended rivalry that results from all fi ve forces
defi nes an industry’s structure and shapes the
nature of competitive interaction within an
industry.
As different from one another as industries
might appear on the surface, the underlying driv-
ers of profi tability are the same. The global auto
industry, for instance, appears to have nothing
in common with the worldwide market for art
masterpieces or the heavily regulated health-care
1808 Porter.indd 791808 Porter.indd 79 12/5/07 5:34:06 PM12/5/07 5:34:06 PM
LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
80 Harvard Business Review | January 2008 | hbr.org
delivery industry in Europe. But to under-
stand industry competition and profi tabil-
ity in each of those three cases, one must
analyze the industry’s underlying struc-
ture in terms of the fi ve forces. (See the ex-
hibit “The Five Forces That Shape Industry
Competition.”)
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such as software,
soft drinks, an ...
This document discusses Porter's Five Forces framework for analyzing industry competition and outlines the key forces: competitive rivalry, bargaining power of suppliers, bargaining power of customers, threat of new entrants, and threat of substitute products. It then provides an example analysis of the athletic footwear and apparel industry using Under Armour, examining how each of the five forces applies. Finally, it introduces PESTEL analysis, outlining the political, economic, social, technological, environmental, and legal factors that shape the business environment.
Awareness of the fi ve forces can help a company understand th.docxrock73
Awareness of the fi ve forces can help a company understand the structure of its
industry and stake out a position that is more profi table and less vulnerable to attack.
78 Harvard Business Review | January 2008 | hbr.org
1808 Porter.indd 781808 Porter.indd 78 12/5/07 5:33:57 PM12/5/07 5:33:57 PM
P
e
te
r
C
ro
w
th
e
r
Editor’s Note: In 1979, Harvard Business Review
published “How Competitive Forces Shape Strat-
egy” by a young economist and associate professor,
Michael E. Porter. It was his fi rst HBR article, and it
started a revolution in the strategy fi eld. In subsequent
decades, Porter has brought his signature economic
rigor to the study of competitive strategy for corpora-
tions, regions, nations, and, more recently, health care
and philanthropy. “Porter’s fi ve forces” have shaped a
generation of academic research and business practice.
With prodding and assistance from Harvard Business
School Professor Jan Rivkin and longtime colleague
Joan Magretta, Porter here reaffi rms, updates, and
extends the classic work. He also addresses common
misunderstandings, provides practical guidance for
users of the framework, and offers a deeper view of
its implications for strategy today.
THE FIVE
COMPETITIVE
FORCES THAT
by Michael E. Porter
hbr.org | January 2008 | Harvard Business Review 79
SHAPE
IN ESSENCE, the job of the strategist is to under-
STRATEGYSTRATEGY
stand and cope with competition. Often, however,
managers defi ne competition too narrowly, as if
it occurred only among today’s direct competi-
tors. Yet competition for profi ts goes beyond es-
tablished industry rivals to include four other
competitive forces as well: customers, suppliers,
potential entrants, and substitute products. The
extended rivalry that results from all fi ve forces
defi nes an industry’s structure and shapes the
nature of competitive interaction within an
industry.
As different from one another as industries
might appear on the surface, the underlying driv-
ers of profi tability are the same. The global auto
industry, for instance, appears to have nothing
in common with the worldwide market for art
masterpieces or the heavily regulated health-care
1808 Porter.indd 791808 Porter.indd 79 12/5/07 5:34:06 PM12/5/07 5:34:06 PM
LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
80 Harvard Business Review | January 2008 | hbr.org
delivery industry in Europe. But to under-
stand industry competition and profi tabil-
ity in each of those three cases, one must
analyze the industry’s underlying struc-
ture in terms of the fi ve forces. (See the ex-
hibit “The Five Forces That Shape Industry
Competition.”)
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such a ...
Awareness of the fi ve forces can help a company understand th.docxcelenarouzie
Awareness of the fi ve forces can help a company understand the structure of its
industry and stake out a position that is more profi table and less vulnerable to attack.
78 Harvard Business Review | January 2008 | hbr.org
1808 Porter.indd 781808 Porter.indd 78 12/5/07 5:33:57 PM12/5/07 5:33:57 PM
P
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r
Editor’s Note: In 1979, Harvard Business Review
published “How Competitive Forces Shape Strat-
egy” by a young economist and associate professor,
Michael E. Porter. It was his fi rst HBR article, and it
started a revolution in the strategy fi eld. In subsequent
decades, Porter has brought his signature economic
rigor to the study of competitive strategy for corpora-
tions, regions, nations, and, more recently, health care
and philanthropy. “Porter’s fi ve forces” have shaped a
generation of academic research and business practice.
With prodding and assistance from Harvard Business
School Professor Jan Rivkin and longtime colleague
Joan Magretta, Porter here reaffi rms, updates, and
extends the classic work. He also addresses common
misunderstandings, provides practical guidance for
users of the framework, and offers a deeper view of
its implications for strategy today.
THE FIVE
COMPETITIVE
FORCES THAT
by Michael E. Porter
hbr.org | January 2008 | Harvard Business Review 79
SHAPE
IN ESSENCE, the job of the strategist is to under-
STRATEGYSTRATEGY
stand and cope with competition. Often, however,
managers defi ne competition too narrowly, as if
it occurred only among today’s direct competi-
tors. Yet competition for profi ts goes beyond es-
tablished industry rivals to include four other
competitive forces as well: customers, suppliers,
potential entrants, and substitute products. The
extended rivalry that results from all fi ve forces
defi nes an industry’s structure and shapes the
nature of competitive interaction within an
industry.
As different from one another as industries
might appear on the surface, the underlying driv-
ers of profi tability are the same. The global auto
industry, for instance, appears to have nothing
in common with the worldwide market for art
masterpieces or the heavily regulated health-care
1808 Porter.indd 791808 Porter.indd 79 12/5/07 5:34:06 PM12/5/07 5:34:06 PM
LEADERSHIP AND STRATEGY | The Five Competitive Forces That Shape Strategy
80 Harvard Business Review | January 2008 | hbr.org
delivery industry in Europe. But to under-
stand industry competition and profi tabil-
ity in each of those three cases, one must
analyze the industry’s underlying struc-
ture in terms of the fi ve forces. (See the ex-
hibit “The Five Forces That Shape Industry
Competition.”)
If the forces are intense, as they are in
such industries as airlines, textiles, and ho-
tels, almost no company earns attractive re-
turns on investment. If the forces are benign,
as they are in industries such a.
The document discusses the business environment and its various components. It defines the business environment as comprising internal and external factors that influence a company's operations. It classifies the external environment into political, legal, economic, sociocultural, demographic, technological, and natural factors. The internal environment includes elements like organizational culture, management practices, and employee relations. Regular scanning and monitoring of the business environment is important for companies to identify opportunities and threats and respond with appropriate strategies.
The document discusses the business environment and its importance for strategic decision making. It defines the business environment as the aggregate of political, economic, social, technological, legal and other factors that influence organizational operations. It then classifies the business environment into internal and external factors, and discusses various components of the external environment like suppliers, customers, competitors, and socio-cultural, demographic, technological, political and economic conditions. The document emphasizes that regular environmental scanning and analysis is crucial to identify opportunities and threats and enable organizations to adapt proactively.
This document summarizes key concepts from Chapter 3 of BPL 5100 related to analyzing the business environment and industry forces. It defines environmental awareness and forecasting, discusses favorable and unfavorable conditions for businesses. It then outlines the generic (macro) environment including economic, social, cultural, technological, political/legal factors. Finally, it discusses analyzing industry forces using Porter's five forces model, including rivalry, potential new entrants, supplier power, buyer power, and substitutes.
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This document discusses Michael Porter's theories on competitive forces and competitive advantage. It covers Porter's five forces model of competition, including rivalry among existing firms, threat of substitutes, buyer power, supplier power, and threat of new entrants. It also discusses how firms can achieve competitive advantage through developing resources and capabilities to achieve either a cost advantage or differentiation advantage. The document provides examples and details on each of Porter's theories to analyze industry competition and strategy.
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2. Managers in the airline industry have their work cut out for
them; they face one of the most challenging environments
in business. Since 2001 this industry has been
characterized by volatile demand conditions and intense
competition from low-cost carriers such as Jet Blue, Air
Tran, and Southwest Airlines. Consumers have plenty of
options to choose from, and they tend to select carriers with
the lowest prices, putting downward pressure on pricing.
When adjusted for inflation, the price consumers paid to fly
one mile in the United States fell from $0.091 in 1980 to
$0.042 in 2004. Moreover, the cost structure of airlines is
closely linked to volatile fuel prices. Every 5 percent
increase in fuel costs reduces airline profitability by 1
percent, and the price of jet fuel increased from $0.71 a
gallon on average in 2002 to $1.80 a gallon in late 2005. To
complicate matters, many long-established airlines also
have to work with powerful labor unions that historically
have resisted attempts to reduce employee pay and
introduce flexible work processes. This has kept labor costs
high. Due to these conditions, between 2001 and 2004 the
3. The work of all managers is affected by two
main environments:
1. the external environment
2. the internal environment.
4. EXTERNAL ENVIRONMENT
It constitutes everything outside a firm that
might affect the ability of the enterprise to
attain its goals.
The external environment itself can be
subdivided into two main components.
Industry or task environment
General environment
5. INTERNAL ENVIRONMENT
The internal environment constitutes
everything inside the firm that might affect the
ability of managers to pursue certain actions
or strategies.
includes the organization of the firm (its
structure, culture, controls, and incentives),
the employees of the firm (its human capital),
and the resources of the firm (its tangible and
intangible assets).
6.
7. A. THE TASK ENVIRONMENT
One of the most popular frameworks for
analyzing the task or industry environment is
a model developed by Michael Porter known
as the five forces model.
According to Porter, the ability of a firm to
make a profit is influenced by five
competitive forces
That are:
8. the threat of entry by potential competitors,
the power of buyers, the power of suppliers,
the threat of substitute products, and the
intensity of rivalry between firms already in
the industry.
9. (I) THE THREAT OF ENTRY
In general, if an industry is
profitable new enterprises will enter,
output will expand, prices will fall,
and industry profits will decline.
Managers often strive to reduce the
threat of entry by pursuing
strategies that raise barriers to
entry.
10. Barriers to entry are factors that
make it costly for potential
competitors to enter an industry and
compete with firms already in the
industry.
Economies of scale
Brand loyalty
11. (II) BARGAINING POWER OF BUYERS
The next competitive force is the bargaining
power of buyers.
An industry’s buyers may be the individual
customers who ultimately consume its
products (its end users) or the intermediaries
that distribute the industry’s products to end
users, such as retailers and wholesalers.
12. For example, although detergents made by
Procter & Gamble and Unilever are ultimately
purchased by individual consumers, the
principal buyers of detergents from P&G and
Unilever are supermarket chains and
discount stores, which then resell the
products to consumers.
13. Demanding lowering prices & better service,
powerful buyers can squeeze profits out of an
industry.
Thus powerful buyers should be viewed as a
threat.
Alternatively, when buyers are in a weak
bargaining position, firms in an industry may
have the opportunity to raise prices and
increase the level of industry profits
14. (III) BARGAINING POWER OF SUPPLIERS
Suppliers provide inputs to the firm.
These inputs may be raw materials,
partly finished products, or services.
Whether suppliers represent an
opportunity or threat to a firm depends
on the extent of their control over inputs
the firm needs to function.
15. In the extreme case, where there is only a
single supplier of an important input, that
supplier has substantial bargaining power
over the firm and can use this power to raise
input prices and increase costs.
Such a situation constitutes a threat.
In the personal computer industry, where
chip maker Intel has long been the dominant
supplier of microprocessors to personal
computer makers.
16. (IV) THE THREAT OF SUBSTITUTES
substitute products are the goods or
services of different businesses or industries
that can satisfy similar customer needs.
For example, firms in the coffee industry
compete indirectly with those in the tea and
cola drink industries because all three serve
customer needs for nonalcoholic caffeinated
drinks.
17. The existence of close substitutes is a strong
competitive threat because this limits the
prices that companies in one industry can
charge for their products, and thus industry
profitability.
If the price of coffee rises too much relative
to that of tea or cola, coffee drinkers may
switch to those substitutes.
18. (V) INTENSITY OF RIVALRY
Last in Porter’s model is the intensity of
rivalry between firms in an industry.
Intense rivalry between firms, such as we
currently see in the airline industry, is a threat
that reduces the profits of established
enterprises.
A number of different factors determine the
intensity of rivalry in an industry: demand and
supply conditions, and the cost structure of
firms.
19. (A) DEMAND AND SUPPLY CONDITIONS
If overall customer demand for a product or
service is growing, the task environment can
be viewed as more favorable.
Firms will have the opportunity to expand
sales and raise prices, both of which may
lead to higher profits.
Of course the converse also holds: Stagnant
or falling demand is a threat that leads to
lower profits.
20. (B) THE COST STRUCTURE OF FIRMS
Fixed costs are those that must be borne
before a firm makes a single sale.
For illustration, before they can offer service,
cable TV companies have to lay cable in the
ground; this is a fixed cost.
In industries where the fixed costs of
production are high, if sales volume is low,
firms cannot cover their fixed costs and will
not be profitable.
21. This creates an incentive for firms to cut their
prices and increase promotion spending to
raise sales volume, thereby covering fixed
costs.
In situations where demand is not growing
fast enough and too many companies are
cutting prices and raising promotion
spending, the result can be intense
competition and lower profits.
Thus high fixed costs should be viewed as a
threat, particularly when combined with weak
demand conditions or excess capacity.
22. THE GENERAL ENVIRONMENT
general environment is the larger
environment within which the task
environment is embedded.
Elements in the general environment impact
the organization through the medium of the
task environment.
23. A. POLITICAL AND LEGAL FORCES
Political processes shape a society’s laws,
which constrain the activities of organizations
and thus create both opportunities and
threats.
Industry-specific regulators are
government agencies with responsibility for
formulating, interpreting, and implementing
rules specific to a particular industry.
Contd..
24. Rules shape competition in an industry;
thus government regulators can have a
profound impact on the intensity of
competition in a firm’s task environment
and on the opportunities and threats
confronting its managers.
25. B. MACROECONOMIC FORCES
Macroeconomic forces affect the general
health and well-being of a national or the
regional economy, which in turn affect the
profitability of firms within that economy.
Four important factors in the macroeconomic
environment are the growth rate of the
economy, interest rates, currency
exchange rates, and inflation (or deflation)
rates.
26. C. DEMOGRAPHIC FORCES
Demographic forces are outcomes of
changes in the characteristics of a population,
such as age, gender, religion and social
class.
Like the other forces in the general
environment, demographic forces present
managers with opportunities and threats and
can have major implications for an
organization.
27. D. TECHNOLOGICAL FORCES
Over the last century the pace of
technological change has accelerated.
This has unleashed a process that has been
called a “creative destruction.”
Technological change can make established
products obsolete overnight and
simultaneously create a host of new product
possibilities.
28. E. INTERNATIONAL FORCES
The last half century has witnessed
enormous changes in the world
economic system.
Economic growth in places like Brazil,
China, and India is creating large new
markets for goods and services, giving
enterprises an opportunity to profit by
entering these nations.
29. 2. THE INTERNAL ENVIRONMENT
In addition to the external environment,
managers also face the internal
environments of their own organizations
the internal environment includes the
organization of the firm (its structure, culture,
controls, and incentives), its employees
(human capital), and its resources (tangible
and intangible assets).
30. Each of these elements can be a
strength, enabling managers to attain
the goals of the enterprise, or a
weakness that makes it more difficult for
managers to work productively toward
attaining enterprise goals.
This inward focus complements the
identification of opportunities and
threats in the external environment.
31. A. INTERNAL ORGANIZATION
The internal organization of a firm can create an
environment that is easy or difficult to work in.
It might be an enlightened meritocracy that
offers a host of opportunities for advancement,
rewards skilled and creative managers, and
fosters high productivity;
or it might be an inert bureaucracy that punishes
those who advocate change, rewards only those
who promote the status quo.
32. Organization structure defines who has
responsibility for what in an organization,
where power and influence are concentrated
in an organization, and thus whose support is
critical for getting things done.
Controls and incentives tell the manager
what kind of behavior the organization
expects, what is being tracked, and what will
be rewarded.
33. An internal organization that encourages and
rewards high productivity and enables
managers to respond rapidly to external
opportunities and threats can be considered
a strength.
34. B. EMPLOYEES (HUMAN CAPITAL)
The employees of an enterprise can be a
source of sustained competitive advantage,
or they can represent a weakness.
Employees constitute what economists call
the human capital of an organization, by
which they mean the knowledge, skills, and
capabilities embedded in individuals.
Human capital is a crucial source of
productivity gains and economic growth.
35. People can be a distinctive strength or a
weakness relative to competitors;
managers can exert influence over the
human capital of the organization
through human resource practices and
by putting the right internal organization
architecture in place.
36. C. RESOURCES
Resource-based view of the firm
argues that the resources of an
enterprise can be a source of
sustainable competitive advantage.
The resources of a firm are the assets
that managers have to work with in their
quest to improve the performance of the
enterprise.
37. Tangible resources are physical assets,
such as land, buildings, equipment,
inventory, and money.
Intangible resources are nonphysical
assets that are the creation of managers and
other employees, such as brand names, the
reputation of the company, processes within
the firm for performing work and making
decisions, and the intellectual property of the
company
38. The resource-based view argues that a
resource can constitute a unique strength if it
meets the following conditions:
(i) First, the firm must own the resource
(ii) the resource must be valuable
(iii) the resource must be rare
(iv) the resource must be inimitable (unique)
(v) the resource must be non-substitutable
39. For a simple example, consider Aramco, the state-
owned Saudi oil company. Aramco owns a valuable
resource: the sole right to pump oil out of the giant
Saudi Ghawar field, the largest ever discovered. The
resource is valuable because the cost of extracting oil
from Ghawar, at around $10 a barrel, is far below the
price of oil (which in early 2006 stood at $70 a barrel).
The resource is rare because very few oil fields are
as big as Ghawar, and the cost of oil extraction at
Ghawar has long been among the lowest in the
world. The resource is inimitable because other oil
companies cannot simply copy the Ghawar—there is
only one Ghawar. The resource is nonsubstitutable
because there is no other way of producing oil that is
substitutable for production at Ghawar. Thus
ownership of the right to pump oil out of Ghawar
represents a unique strength of Aramco.