There are a number of theoretical models that allow organisations to evaluate their position within their industry. Porter’s model is quite old (relatively) and it is not the only one available and, depending on who you talk to, it may not be the best. However, for this course, we will use it as an example of applying information systems theory to the real world.
The motivation for this primer is that students are failing to use the model in a useful way and they are losing marks in their end of course exam.
We will use, as an example, the Pfizer case from Chapter 12, page 453 of the 9th edition of the Laudon and Laudon text: Management Information Systems, Managing the Digital Firm.
For the assignment on Porters 5 forces model, students need to provide a quick overview of the organisation and the environment in which it operates. Do not do this in the exam (unless asked to) or you will lose time and gain no extra marks for your effort. I won’t provide the overview here I can leave that to students but I would like to make some comments on the pharmaceutical industry. Download the case, read it and consider the following.
Lets apply some common sense. We know that when people need a prescription filled, they go to a chemist (or drug store, pharmacy or whatever it is called in your part of the world).
When they talk to the sales assistant, they may be asked if they want to purchase a cheaper brand, if one is available – this is certainly the case in Australia. Given that the pharmaceutical industry is the biggest industry in the world (followed by the toy business), it means that it is a very competitive environment and there will be a lot of choice for consumers. Having noted that, let’s look at Porter’s 5 forces model.
The Research paper on Toy World, Inc. Case Analysis
Executive Summary Toy World, Inc. is a company that has been manufacturing toys for children since 1973. Since 1976, the company has enjoyed profitable operations. At the end of 1993, revenue and profit came close to $8 million and $270 thousand respectively. With Jack McClintock as president and Dan Hoffman as production manager, the two have tried to find a strategy to adjust operations to the ...
Reviewing the 5 forces, we can summarise the different influences on an organisation as follows:
•The power of customers
•The power of suppliers
•The power of existing competitors
•The power of new entrants into the market and
•The power of substitute products
(Some of you may also point out, correctly, that environmental factors can also have a substantial effect on an organisation.)
You will not score any marks just for citing the components as this is not using the model or answering the question. The critical part of this exercise is to evaluate each of these components and argue whether or not it has a high or low influence on the organisation in question.
The justification is provided in the form of a table. (This is a very good exam technique and one that you should use whenever possible.)
ForcePowerJustification
CustomersHighThe effort to switch to an alternative drug supplied by a competitor is nil. Customers, therefore, have all the power when they wish to make a purchase (except in the case of only one manufacturer for an arbitrary drug but this is the exception to reality).
SuppliersHighIt might be possible to argue who has the power when considering suppliers in this example. It often comes to a case of supply Vs demand and in this case there are a number of drug companies requiring the chemical ingredients from a smaller number of suppliers. This leaves the power in the hands of the suppliers. Existing competitorsHighAs mentioned above, even though Pfizer might be the largest pharmaceutical company in the largest industry in the world, they still have very serious competitors.
This should be evident from the case based on the expense and lengths Pfizer goes to in order produce new drugs. New entrantsLowThis is a very expensive industry to enter and, accordingly, most potential new entrants will think twice before committing themselves to setting up a new business. Substitute productsHighThis component also has a serious influence on Pfizer’s operation and the company’s strategic thinking. In this case it relates to the “existing competitors” component and given the fierce rivalry between firms, it is clear that more than one organisation can supply a given drug and there are plenty of generic brands available. (While herbal remedies, jungle products etc are also substitutes, they are marginal and do not represent viable alternatives.)
The Term Paper on Information Is Power Buyer Resources Organisation
Information is power. Discuss What is power? Power is hard to define, as most definitions are circular, they do not really tell you anything. Power takes different guises and is therefore difficult to pin down. One definition is: "The ability of a firm (or an entrepreneur) to own and control critical assets in markets and supply chains that allow it to sustain its ability to appropriate and ...
