Module 2 Discussion

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Business Finance

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The content in Module 2 includes the study of frameworks that may be used to assist in industry analysis. The discussion this week centers on frameworks and their usefulness, attributes, and strengths.

Table 2.1 in your textbook, Foundations of Strategy,shows a listing of profitability of U.S. industries. Pick an industry of interest to you, and research leading Middle Eastern companies in that industry. Develop a convincing argument that Porter’s Five Forces Model would or would not be a useful tool for this industry.

Tip: Using the Saudi Digital Library search engines, and key words such as industry analysis framework, industry analysis comparison, nonprofit strategy, 4 Ps model, Porter’s Five Forces, and others, will yield plenty of credible resources to use in this discussion.

  • Embed course material concepts, principles and theories, which require supporting citations along with at least one scholarly peer-reviewed reference in supporting your answer unless the assignment calls for more. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.
  • You need to reply to at least two peer discussion question post answers to this weekly discussion question. These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post answer. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required.
  • Use Saudi Electronic University academic writing standards and APA style guidelines.

Two paragraphs only no need for introduction or conclusion

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88 industry, a firm must meet two criteria: first, it must supply what customers want to buy; second, it must survive competition. Hence, we may start by asking two questions: • What do our customers want? • What does the firm need to do to survive competition? FOUNDATIONS OF STRATEGY To answer the first question we need to look more closely at customers of the industry and to view them, not as a threat to profitability because of their buying power, but as the purpose of the industry and its underlying source of profit. This requires that we enquire: Who are our customers? What are their needs? How do they choose between competing Table 2.2 What determines inter-firm differences in profitability? The role of industry Percentage of variance in firms' return on assets explained by: Industry effects Unexplained variance Firm effects Schmalensee (1985) 19.6% 0.6% 79.9% Rumelt (1991) 4.0% 44.2% 44.8% McGahan & Porter (1997) 18.7% 31.7% 48.4% Hawawini et al. (2003) 8.1% 35.8% 52.0% Roquebert et al. (1996) 10.29 55.0% 32.0% Misangyi et al. (2006) 7.6% 43.8% n.a. Notes: "Firm effects' combine business unit and corporate effects. The rows do not sum to 100% because other sources of variance are not reported. Source: R.Schmalensee, 'Do markets differ much?' American Economic Review 75 (1985): 341-51; R.P. Rumelt, 'Does industry matter much?' Strategic Management Journal 12 (1991): 167-85; A. M. McGahan and M. E. Porter, 'How much does industry matter, really? Strategic Management Journal 18 (1997): 15-30; G. Hawawini, V. Subramanian and P. Verdin, 'Is firms profitability driven by industry or firm-specific factors? A new look at the evidence Strategic Management Journal 24 (2003): 1-16;J. A. Roquebert, R. L. Phillips and P. A. Westfall, 'Markets vs. management: what drives profitability?' Strategic Management Journal 17 (1996): 633-64; V. F. Misangyi, H. Elms, T. Greckhamer and J.A. Lepine, "A new perspective on a fundamental debate: a multilevel approach to industry, corporate and business unit effects, Strategic Management Journal 27 (2006): 571-90. www.foundationsofstrategy.com iii Q Figure 2.6 Identifying key success factors
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Attached.

Running Head: PORTER’S FIVE FORCES MODEL

Porter’s Five Forces Model
Student’s Name
Course Name
Instructor’s Name
Date

1

PORTER’S FIVE FORCES MODEL

2

Effects of Porter’s Five Forces Model to SABIC
SABIC is one of the biggest middle eastern companies with its origin from Saudi Arabia,
and it is diversified in the manufacture of metal, chemical intermediates, fertilizers, and
polymers. It is a large company that ought to apply Porter’s five forces model to do its industry
analysis. However, the company dominance to some extent makes Porter’s Five Forces Model
not useful (Arshed & Pancholi, 2016). First, the threat of new entrants is their ...


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Excellent! Definitely coming back for more study materials.

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