Porter's Five Forces, Value Chain, Balanced Score Car

Topics: Strategic management, Management, Balanced scorecard Pages: 13 (4426 words) Published: May 9, 2006
Critically evaluation of Porter's five forces, Value Chain Analysis, Balanced Scored Card

Given the demands of today's competitive and dynamic environment, it is quite challenging to understand strategic issues facing organizations and develop the capability for long term organizational success. This report aims to present a critically analysis of three frameworks across organizations: Porter's Five Forces, Value Chain and Balanced Scorecard. Such critical evaluation includes identifying the benefits and limitations of three frameworks and considering some implementation issues within organizations.

As powerful strategic management tools, Porter's Five Forces, Value Chain and Balanced Scorecard frameworks are linked and interacted each other in a wide circle of business in context. Porter's Five Forces and Value Chain both help strategic managers to make decision on the basis of organizational external environment and internal analysis. The two frameworks are especially valuable for managers to develop and implement long-term strategy for organizations so as to build and maintain competitive advantages in the long run. And Balanced Scorecard can ensure and monitor the executions of strategy made by managers in a set of well-structured measures.

However, beyond the linkage between them, these three respective frameworks do have its own particular emphasis which is applied in different directions among organizations. Porter's Five Forces mainly focuses on the industry structure analysis in the organizations external environment. It reveals the source of competition in an industry and external influence including the threats and opportunities of the industry that organization has to face to obtain competitive advantage. Value Chain highlights the explorations of internal analysis of a chain of business activities. It explores the role and contribution of organization's resources corresponding to primary and support activities in a cost-effective way to gain cost advantage. As for the Balanced Scorecard, it emphasizes the evaluation of organizational overall performance by integrating financial measures with other key performance indicators. And measuring overall performance in organization's balanced scorecard is directly linked to its strategy to make profits in the long run.

All in all, it is important to be aware of their benefits and weakness as well as the potential problems of three approaches when applying them real business operations, and it largely relies on successful implementation by senior managers in organizations.

Introduction In today's dynamic and competitive business environment, survival, growth and profitability are the essence goals of all industries. Nowadays, Porter's Five Forces, Value Chain and Balanced Scorecard frameworks are currently being adopted as the powerful management tools of choice by many organizations. The essence of these three frameworks is that they can help senior managers to make right decision and build and sustain competitive advantages in the organization level. This report presents the overview approach of these three frameworks across organizations. And critically evaluation of three frameworks mainly focused on identifying the benefits and limitations of three frameworks and exploring some perceived issues or problems regarding implementation. Finally the linkage and dissimilarities between three frameworks are concluded in the last section of this report.

Porters five forces, as a powerful analysis tool, enables managers in corporations to analyze the current situation of their industry in a structured, easy-to-understand way. From a strategic management perspective it is useful for managers in any organization in the same industry or sectors to understand the five competitive forces acting on and between organizations in the same industry and or sector since this will determine the attractiveness of that industry and the way in which individual...
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