The Competitive Forces that Drive the Management System
The application of systemic tools to analyze an organizations external environment and implement an effective strategy has enabled companies to better position themselves in their industry. The analysis of current conditions is a necessary precursor to the system that will manage the changes required to achieve the company vision and live up to its mission and values. The basic tools for this approach are Michael Porter’s Five Competitive Forces that Shape Strategy and Robert Kaplan and David Norton’s Strategic Management System. Each approach addresses a different stage of the strategic lifecycle, but on a fundamental level, remain equally necessary for success. It can be argued that Kaplan and Norton’s strategic Management System cannot be properly implemented without consideration of Porter’s Five Forces and the information that this analysis tool brings to bare. Porters approach focuses on external factors within a defined industry into which a company is entering or already competing. He suggests that there is a framework of five forces that can accurately describe the variables that change the competitive landscape of an industry.(Porter, 2008) From this analysis, an organization is able to gather the necessary information to begin the process of shaping strategy. These external factors will lay the foundation for the changes that must be made within an organization in order to remain competitive. Essentially, Porter’s framework is a tool for organizing and processing information on existing conditions outside the organization as opposed to a map or system intended to implement change within. As an example, an appliance distribution firm is interested in launching a furniture distribution division in order to compensate for loss of market share in its core business. Management would potentially need to adjust its mission, vision, and values then turn their focus outside to the...
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