CT module 3

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Module 03: Critical Thinking

Critical Thinking: Industry Analysis (105 points)

To prepare for this assignment, review Figures 2.2 and 2.3 from your textbook and the text relative to Porter’s Five Forces of Competition framework. Consider the role of the following key forces of suppliers, substitutes, buyers, and potential entrants.

  • Select a Middle Eastern company of your choosing and assess the power of each of five forces on that firm: that is, how powerful are the buyers, suppliers, and substitutes? How formidable are the barriers to entry and how intense is the rivalry among existing firms?
  • Which of the forces has the biggest impact on the firm and why? What are the structural determinants impacting the firm?
  • Focus on how you see your chosen company positioned in the market vis-à-vis the five forces you have identified, and which recommendations would you give to the firm’s management to improve their position in relation to suppliers, buyers, barriers to entry, and competitors.

Your well-written paper should meet the following requirements:

  • Be 4-5 pages in length, which does not include the required title page or reference page, which are never a part of the content minimum requirements.
  • Use Saudi Electronic University academic writing standards and APA style guidelines.
  • Support your submission with course material concepts, principles and theories from the textbook and at least two scholarly, peer-reviewed journal articles unless the assignment calls for more.
  • Review the grading rubric to see how you will be graded for this assignment.

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Il STC 3:23 PM 1 * 100% 4 < Foundations of...obert M Grant.pdf Figure 2.2 Porter's five forces of competition framework 61 SUPPLIERS Bargaining power of suppliers INDUSTRY COMPETITORS CHAPTER 2 INDUSTRY ANALYSIS POTENTIAL ENTRANTS Threat of new entrants Threat of substitutes SUBSTITUTES Rivalry among existing firms Bargaining power of buyers BUYERS Porter's five forces of competition framework A helpful, widely used framework for classifying and analysing the factors that determine the intensity of competition and levels of competition in different industries was developed by Michael Porter of Harvard Business School. Porter's five forces of competition framework views the profitability of an industry (as indicated by its rate of return on capital relative to its cost of capital) as determined by five sources of competitive pressure. These five forces of competition include three sources of'horizontal competition: competition from substitutes, competition from entrants and competition from established rivals; and two sources of 'vertical competition: the power of suppliers and power of buyers (see Figure 2.2). The strength of each of these competitive forces is determined by a number of key structural variables, as shown in Figure 2.3. Competition from substitutes The price customers are willing to pay for a product depends, in part, on the availability of substitute products. The absence of close substitutes for a product, as in the case of petrol or cigarettes, means that consumers are comparatively insensitive to price (i.e. demand is inelastic with respect to price). The existence of close substitutes means that customers will switch to substitutes in response to price increases for the product (i.e. demand is elastic with respect to price). The internet has provided a new source of substitute www.foundationsofstrategy.com 9 !!! a 0 comments → Activity @ Type a comment 1 STC 3:23 PM 1 * 100% 4 < Foundations of...obert M Grant.pdf Figure 2.3 The structural determinants of the five forces of competition 62 SUPPLIER POWER Factors determining power of suppliers relative to producers, same as those determining power of producers relative to buyers - see "Buyer Power" box FOUNDATIONS OF STRATEGY THREAT OF ENTRY • Capital requirements • Economies of scale • Absolute cost advantages • Product differentiation • Access to distribution channels . Government and legal barriers • Retaliation by established producers INDUSTRY RIVALRY • Concentration • Diversity of competitors • Product differentiation • Excess capacity and exit barriers • Cost conditions THREAT OF SUBSTITUTES • Buyer propensity to substitute • Relative prices and performance of substitutes BUYER POWER Price Sensitivity Bargaining Power • Cost of product • Size and concentration relative to total cost of buyers relative to producers • Product • Buyers' switching costs differentiation • Buyers' information • Competition • Buyers' ability to between buyers backward integrate competition that has proved devastating for a number of established industries. Travel agencies, newspapers and telecommunication providers have all suffered devastating competition from internet-based substitutes. The extent to which substitutes depress prices and profits depends on the propensity of buyers to substitute between alternatives. Most power users are indifferent as to how their electricity is generated. Hence, wind farms face strong substitute competition from electricity generated by natural gas, coal and nuclear power. In the US, the steep decline in natural gas prices between July 2008 and July 2011 as a result of the boom in shale gas has sharply reduced the profitability of the wind farms. www.foundationsofstrateay.com 19 a 0 comments → Activity @ Type a comment
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Running Head: PORTER’S FIVE FORCES

Porter’s Five Forces
Name of Student
Name of Institution

1

PORTER’S FIVE FORCES

2
Porter’s Five Forces

The company I have selected is a bank. Banks do not have the processes of production
and inventory management that factories do. However, they have departments and process that
substitute those normal operations in a company producing tangible goods. The main product of
a bank, like any other financial institution, is the service they offer. There are many financial
services that banks offer from automated teller machines, mobile banking, internet banking,
long-term and short-term loans to specialized services like consultancy.
The area in which a bank operates will influence the ways it provides its services. For
example, a bank operating in a poor country will design their products to suit the banking needs
of the population that it serves. Consequently, a bank in a developed nation where a big part of
the population is rich people also designs its products to suits the rich people’s banking needs.
Banks in the Middle East, due to the large population of Muslims must provide services that suit
the Islam community. They must provide Islamic banking.
I have chosen to analyze the competition of Qatar National Bank. Qatar National Bank
was founded in 1964 and is jointly owned by the Qatar government and the public each of who
own half. The bank has grown over the years to become not only the biggest bank in Qatar but
also the biggest in the whole of Middle East with operations in more than thirty countries. The
bank has an Islamic br...


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Just what I was looking for! Super helpful.

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