American Public University
Using Porter’s Five Forces in Developing International Strategic Plan Michael porter developed a model that can help strategic management to better understand the industry context in which the industry operates. The framework he created models an industry as being influenced by five forces. Michael Porter framework can help a company when developing a business strategy if it decided to go global. When entering the international market the company has to put in mind what kind of competition it will find in the foreign market and how can it overcomes the different challenges. The five forces that affect an industry includes: I - Rivalry:
Competition between rivals can drive profits to zero. Each rival strives for competitive advantages over other firms. Competitive advantages are achieved by cost advantages by delivering same benefits of competitors but at lower prices and/or differentiation advantage by delivering more benefits than other competitors. To achieve competition advantages over other rivals, A firm needs resources and capabilities that are superior to other competitors. This superiority ensures that other rivals would not replicate what the firm is doing and lose its advantages over other firms. So, when going global we have to put in mind That the product we are offering must compete in price and quality with local firms. Rivalry intensifies or decreases according to the acts of the different rivals in the market. A firm has many options to take advantage over its competitors and increase rivalry such as: A- Changing prices.
B- Improving product offering more benefits to consumers. C- Creatively uses distribution outlets
D- Setting high quality standard with suppliers.
The intensity of rivalry is influence by the following characteristics: 1. The number of firms in the market. If the...