Wednesday, November 16, 2011

TACKLING the FORCES of MARKET CHANGE


Industries (Markets to be precise if you’re Michael Porter) differ in many aspects across the world. With
these differences, we allude to : types
of clients, their demands, the products and services offered, the local economy
and its macroeconomic relationships. The market place is a source of income for
suppliers and a fulfiller of the needs and wants from consumers. Once there is
a need/want, there is a market. Once there is a market, there is potential for
wealth. Because of this, all markets, given policy permission are subject to
drastic changes, whether due to new competition, internal or external economic
shocks, natural disasters etc.

The only constant with respect to the difference in markets is
change…

It’s now up to how players, more importantly suppliers, react to
these changes. The reaction, or lack thereof can determine its future viability
and this is what managers and senior executives mull over in meetings all over
the world.
According to top strategist Michael Porter, there are 5 forces that can
determine a company’s future in a market that requires agility and self-perseverance.

1.
The threat of a new entrant
2.
The intensity of completion in the marketplace
3.
Pressures from substitute products
4.
Bargaining powers from buyers
5.
Bargaining powers of supplier

To maximize agility and the ability to adapt to market changes,
these are the first things executives should analyze. This is the tip of the
iceberg when determining the strategy going forward. The lucratively of the
marketplace is proportional to its susceptibility to change and stakeholders
better be aware of these considerations if they want to stay afloat, much less
be successful.




Sources
: “A Fresh Look at Industry and Market Analysis” – Stanley Slater & Eric
Olson

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