Over the past few weeks in class, we have been starting to formulate what type of actions and company organization leads to firms being successful. We have completed two cases studies thus far; Disney and Merck. In the Disney case we discussed the importance of properly identifying the big picture issues that cause the organization to struggle. In terms of Disney, the main issue was how fast they were growing and over how many different industries. Being able to control and organize extensions of the company such as ABC, ESPN, theme parks, consumer products, animations, and international growth is extremely difficult to do, let alone live up to the Disney standard. When discussing the Merck case, we created a stakeholder analysis. Who was going to benefit from the production, advancement, sale, and use of their drugs?
This week in class we started to discuss one of the focal points in the curriculum: Porter's Five Forces. For those who are not familiar with Porter's Five Forces, it is a strategic model that businesses use to define an industry and guide the competitive positioning they take within the industry. The five components of the model are: bargaining power of supplies, bargaining power of buyers, threat of new entrants, threat of substitutes, and rivalry among firms. Analyzing these different areas can give management teams a good idea of how their profits will be affected by industry concentration. Less competitive industries are more attractive and overall more profitable.
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