Competitive advantage - Part 7

Executive Summary

            The world today is so advanced that each organization or firm must do their own strategy on how to improve products/services and to eventually increase customer satisfaction - Competitive advantage introduction. Firms must consider on the development of strategies in order to stay longer in the local and global market. Proper strategic management must be applied so as not to be left behind by other companies which sell the same products as the company itself.

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            In addition, good leadership must also be established to ensure that the company is run by a person who can produce outputs effectively and efficiently. In this way, employees are more motivated to perform their duties and responsibilities in the company. In the company, nobody is indispensable so the management must value everybody – both employees and customers,.

            Using Porter’s Five Forces, Baderman Islands will have a great impact in the environment. The company can achieve its vision and mission and serve its customers to the best of their ability. Porter clearly states that there is a strong competition in the market today and if a company will not do any move to compete with their rivals, they will stay where they are in the coming years and will eventually be far behind by the industries having the same products/services as theirs.

            It is, therefore, necessary for a company, most especially Baderman, to establish rules and policies which can help them improve their products and services and can gain more and more customers. These can only be achieved if they are not resistant to change. Change must always be applied to maintain the flexibility of the company which solely depends on the demands of the market.

Introduction

In today’s modern world where competition is so stiff, there is a need for companies to improve their services and products to maintain and increase customer satisfaction. Companies must follow strategic rules on how to make the company at its best and how to stay in the market for years – both in locally and globally. Companies must take into consideration the customers and the competitors. They must consider the customers because they are the “lifeblood” of the company; without them, the company cannot stay in the market. They must also consider the competitors because if their company is far behind its competitors, there is a tendency that their customers will transfer to the other company.

In strategic management, there are five forces of Porter’s which models pure competition in the market and that this also implies that there must be a constant risk-adjusted rates across firms and industries. Michael Porter explained the framework of the five forces and that the industry is greatly influenced by it. Porter’s Five Forces includes Supplier Power, Barrier Entry, Threat of Substitute, Buyer Power and Rivalry. The level of rivalry among industries varies across various organizations. Firms strive harder over their rivals and play a healthy competition. One of the moves that a firm may take to be ahead of their rivals is changing the price of the products/services – either increasing or decreasing it to gain a temporary advantage. Moreover, the products from other firms are considered as substitute products which may be a threat to the firm itself. The buyer power, on the other hand, is the influence that customers have in the organization. Buyers are successful if they are concentrated; purchase a significant portion of the output and possess a credible backward integration threat. However, buyers are also considered weak if producers are threaten forward integration and they supply critical portion of the buyer’s input. In addition, suppliers are powerful if they are concentrated and if there is a significant cost to switch suppliers and most importantly, if customers are also powerful. Furthermore, barriers to entry define the industry. Barriers reduce the entrance of new firms and maintaining levels of profit for companies which are already in the industry. Barriers come from different sources – government, patents and propriety knowledge and organizational economies of scale. (http://www.quickmba.com/strategy/porter.shtml)

            With regards to Baderman Islands, the company has a competitive advantage if the management learns to adapt the strategies stated by Michael Porter. One way that Baderman can maintain its loyal customers is the increase/decrease their prices with respect to the prices of their rival companies. This is possible for Baderman if they are open to the idea of applying such. Baderman must not resist change for this can help a lot in the improvement of their products and services. Change is an agent which must be applied from time to time and is badly needed if Baderman is experiencing some serious economic problems. However, Baderman must make it sure that everything they change is for the benefit of the majority of the people. In addition, Baderman must value their customers because they are considered as the lifeblood of the organization. Employees must also be valued for without them the company cannot render best services to the clients. In general, Baderman must be able to motivate well the employees as well as to satisfy their customers.

            In the coming years, if Baderman continues to apply the facts mentioned by Michael Porter in his Five Forces, Baderman will stay in the market for a longer time and can continue serving its customers with the most effective and efficient services. Furthermore, Baderman may also be able to join in a healthy competition among the rivals in the industry and can eventually stay in the local and global market for a longer period of time.

Conclusion

            Baderman Island must realize its vision and mission by applying the concepts of Michael Porter – the Five Forces. With this in mind, everything is possible to Baderman to join in a healthy competition in the local and in the global market.

            In general, companies must be able to inculcate in the minds of the employees and customers that nobody is indispensable – that is each plays a vital role in the industry. With this, they must learn how to apply the value of establishing a good foundation which may then be the beginning of the success of an organization.

Recommendation

            Having mentioned the five forces of Michael Porter, the company must learn how to understand that there are companies out there which may be considered as rivals. So, the company must learn how to be flexible in the changing world of modernization, value its customers and employees as well, must learn how to play a healthy competition in the local and global market.

            Baderman Islands must be able to open its door for newer opportunities which may then be the key for the company’s success.

Reference:

Quickmba.com, 1999-2007. Porter’s Five Forces: A Model for Industry Analysis. Retrieved on September 18, 2008 at http://www.quickmba.com/strategy/porter.shtml.

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