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Topic: Porter’s five forces framework

Leaning Objective:
· To help understand the impact of market and industry on the organization
· To help student apply porter’s model on the organization
Learning Outcomes:
· Learner will be able to evaluate the market and industry for the organization
· Learner will be able to derive five forces that determine the attractiveness of a market for the
organization
· Learner will be able to apply porter’s five forces model on the organization
The Case:
Café Aylanto is situated in Lahore's popular upscale restaurant and shopping district, it promises an
extraordinary experience of culinary sensation and offers a consistently pleasurable dining experience in an
elegant, yet casual atmosphere.
Café Aylanto offers a unique dining environment with areas of the restaurant specifically catered to different
tastes and requirements. There is also an outside patio where guests can dine under the stars while enjoying
the pleasant evening breeze. The patio area is equipped with mist fans to cool the summer evenings and
heating lamps are in place for the cold, crisp winter nights.
But unfortunately due to number of restaurants opened in Lahore, sales of Café Aylanto are decreasing day
by day. Suppose you are being appointed as a strategic analyst for analyzing the reasons behind the
decreasing market share.
The Requirements:
· By keeping in view the restaurant industry, you are required to apply Porter’s five forces model for
Café Aylanto.
· After conducting the analysis which strategy you would suggest to your owner for business growth.
DEADLINE:
· Make sure to upload the solution file before the due date on VULMS.
· Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
· Use the font style “Times New Roman” or “Arial” and font size “12”.
· It is advised to compose your document in MS-Word format.
· You may also compose your assignment in Open Office format.
· Use black and blue font colors only.
REFERENCING GuIDELINES:
· Use APA style for referencing and citation. For guidance search “APA reference style” in Google and
read various website containing information for better understanding or visit
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
· It is submitted after the due date.
· The file you uploaded does not open or is corrupt.
· It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
· It is cheated or copied from other students, internet, books, journals etc.

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ye to ist question ho ga doosry question me konsi strategy puchi gay hy me confused reply anybody

Plz discuss about the 2nd question also

yar strategy kon se apply ho ge........

plz koi 2nd question b discuss karo

some1 plz tell the ans of second part !!! 

i think threat of new entrants.

kindly guide me if im wrong.

Dear threat of new entrants can be a caused in declining of sale its not a strategy to overcome this problem. We have to found a strategy to solve this problem.

So discuss how we can increase sales???     

Michael Porter's five forces

Michael Porter's 1979 framework uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the attractiveness of a market. Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affects its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.

Five Forces

Five forces -- the bargaining power of customers, the bargaining power of suppliers, the threat of new entrants, and the threat of substitute products -- combine with other variables to influence a fifth force, the level of competition in an industry. Each of these forces has several determinants:

The bargaining power of customers

  • buyer concentration to firm concentration ratio
  • bargaining leverage
  • buyer volume
  • buyer switching costs relative to firm switching costs
  • buyer information availability
  • ability to backward integrate
  • availability of existing substitute products
  • buyer price sensitivity
  • price of total purchase

The bargaining power of suppliers

  • supplier switching costs relative to firm switching costs
  • degree of differentiation of inputs
  • presence of substitute inputs
  • supplier concentration to firm concentration ratio
  • threat of forward integration by suppliers relative to the threat of backward integration by firms
  • cost of inputs relative to selling price of the product
  • importance of volume to supplier

 

 

The threat of new entrants

  • the existence of barriers to entry
  • economies of product differences
  • brand equity
  • switching costs
  • capital requirements
  • access to distribution
  • absolute cost advantages
  • learning curve advantages
  • expected retaliation
  • government policies

The threat of substitute products

  • buyer propensity to substitute
  • relative price performance of substitutes
  • buyer switching costs
  • perceived level of product differentiation

The intensity of competitive rivalry

  • power of buyers
  • power of suppliers
  • threat of new entrants
  • threat of substitute products
  • number of competitors
  • rate of industry growth
  • intermittent industry overcapacity
  • exit barriers
  • diversity of competitors
  • informational complexity and asymmetry
  • brand equity
  • fixed cost allocation per value added
  • level of advertising expense

Some argue that a 6th force should be added to Porter's list to include a variety of stakeholder groups from the task environment. This force is referred to as "Relative Power of Other Stakeholders". Some examples of these stakeholders are governments, local communities, creditors, and shareholders.

This 5 forces analysis is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.

is me strategy konsi apply ho ge 2nd question me

Growth Strategies in Business
Market Penetration
Market Expansion
Product Expansion
Diversification
Acquisition
choose one best suited strategy for cafe alynto and write about that.
thanx
duaon mein yad rakhiyega

Oh very well done thanks buddy

MGT603 1st Assignment Solution Due Date:19 nov 2012

MGT603 1st Assignment Solution Due Date:19 nov 2012 


Solution : 


Michael Porter's five forces
Michael Porter's 1979 framework uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the attractiveness of a market. Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affects its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.
Five Forces
Five forces -- the bargaining power of customers, the bargaining power of suppliers, the threat of new entrants, and the threat of substitute products -- combine with other variables to influence a fifth force, the level of competition in an industry. Each of these forces has several determinants:
The bargaining power of customers
buyer concentration to firm concentration ratio
bargaining leverage
buyer volume
buyer switching costs relative to firm switching costs
buyer information availability
ability to backward integrate
availability of existing substitute products
buyer price sensitivity
price of total purchase
The bargaining power of suppliers
supplier switching costs relative to firm switching costs
degree of differentiation of inputs
presence of substitute inputs
supplier concentration to firm concentration ratio
threat of forward integration by suppliers relative to the threat of backward integration by firms
cost of inputs relative to selling price of the product
importance of volume to supplier


The threat of new entrants
the existence of barriers to entry
economies of product differences
brand equity
switching costs
capital requirements
access to distribution
absolute cost advantages
learning curve advantages
expected retaliation
government policies
The threat of substitute products
buyer propensity to substitute
relative price performance of substitutes
buyer switching costs
perceived level of product differentiation
The intensity of competitive rivalry
power of buyers
power of suppliers
threat of new entrants
threat of substitute products
number of competitors
rate of industry growth
intermittent industry overcapacity
exit barriers
diversity of competitors
informational complexity and asymmetry
brand equity
fixed cost allocation per value added
level of advertising expense
Some argue that a 6th force should be added to Porter's list to include a variety of stakeholder groups from the task environment. This force is referred to as "Relative Power of Other Stakeholders". Some examples of these stakeholders are governments, local communities, creditors, and shareholders.
This 5 forces analysis is just one part of the complete Porter strategic models. The other elements are the value chain and the generic strategies.

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