Strategic Management: Porter’s Five Forces and Quality Control

Porter’s Five Forces for Industry Analysis

Porter’s Five Forces are used to exploit opportunities in an environment and protect a business against competition. The five forces are:

• Potential New Entrants: Barriers are higher in capital-intensive industries (e.g., motor cars) than in service industries (e.g., estate agencies).
• Bargaining Power of Buyers: Increases with advertising and consumer information, as buyers become more informed about their purchases.
• Bargaining Power of Suppliers: Depends heavily on the availability of substitute suppliers.
• Threat of Substitute Products: Becomes more powerful when viable alternatives for a company’s product exist.
• Rivalry Among Competitors: Manifests through advertising, pricing strategies, and product differentiation.

Barriers to Planning and Solutions

Managers must identify and address common obstacles to effective planning:

Main Barriers to Planning

• Inability to plan or inadequate planning.
• Lack of commitment to the planning process.
• Focusing on the present at the expense of the future.
• Inferior information.
• Too much reliance on the organization's planning department.
• Concentrating only on controllable variables.

How Managers Can Overcome Barriers

Managers can mitigate these issues through the allocation of responsibility, clear communication, training, self-managed teams, encouragement, and the development of contingency strategies.

Understanding Strategic Drift

Strategic drift occurs when an organization is carried forward by its own momentum, becoming increasingly misaligned with its environment. When this gap becomes too significant, the organization is forced to make sudden, drastic adjustments.

Quality Management Principles

Quality management is the act of overseeing all activities and tasks needed to maintain a desired level of excellence. This includes quality planning, assurance, control, and improvement, often referred to as Total Quality Management (TQM). It is both systematic and value-based, suggesting that improving quality provides maximum strategic impact on the future of the organization.

Advantages of Quality Circles

Quality circles are a participatory management technique that enlists employees to solve problems related to their specific jobs. The process involves:

1. Identifying company problems.
2. Setting priorities.
3. Discussing and investigating issues.
4. Finding solutions.
5. Acting upon authorization and presenting findings to management for approval.