Porter’s Five Forces Fuad Khan, Date (29 November 2010) Mercyhurst College, Erie PA Advanced Analytic Techniques Course Purpose The purpose of my paper is to assess the value of Porter's Five Forces method to formulate a winning strategy in Central Command (CENTCOM) market space and a personal test case. The analytic question used to test the Porter's Five Forces analytical technique is as given: "Is company TNISO in a position to win contracts for Open Source Intelligence services focusing on the Middle East and South East Asia with Central Command?” The criteria used to evaluate the Porter's Five Forces method shown below: Formulation of competitive business strategy: Formulate a competitive business strategy to win contracts in CENTCOM market. Repeatability: Repeatability of using Porter's Five Forces method in other markets Ease of use: How easy is it to create a potential winning business strategy using Porter's Five Forces method, Porter's Five Forces analytic method is the most appropriate method to critically analyze a potential market space like U.S. Central Command and produce a winning strategy on how to capture a market segment in this market. Literature Review Most authors used Porter’s Five Forces analytical techniques to understand the competitive forces in a particular industry and gain competitive advantage in an industry. Two authors WeiMing and Irene Siaw clearly used differentiation strategies to counter the competitive forces in a internet banking industry. The other authors performed in-depth survey of competitive forces in the industry. The authors also found competitive forces, which were weak and not relevant. Generally, all authors used Porter’s Five Forces to gain a competitive advantage in the industry, outperform, and dislodge incumbents in the industry. Michael E. Porter in his paper defined the Porter Five Forces analytical method. He also cautioned that a strategy analyst could undermine the industry structure by creating new kinds of competition, which will not allow any company to win in the industry. Wei-Ming and Kang-Wei found the competitive forces in the Taiwanese public sector industry using Porter’s Five Forces analytical method and then used cost leadership and service differentiation strategies to counter the competitive forces in the Taiwanese public sector industry. Both researchers also found professional services firms deeply impacted by competitor rivalry. Competitors can use price reduction, service enhancement and social networks to win contracts. Irene Siaw and Alec Yu also used Porter’s Five Forces to find competitive forces exerted by internet in the banking industry. Both authors also advocated the use of product differentiation strategy to counter competitive forces in the banking industry. Irene and Alec also found that the internet has lowered the barriers to entry in most industries, a fact applicable to other service industries also. Yeo and Huang explored competitive forces in mobile phone e-commerce industry. They found brand names are significant barriers to entry into the mobile phone e-commerce industry. It is very hard to capture market share from an established industry player with established brand name. Risk of business failure or collapse is high if incorrect or irrelevant competitive forces are identified in an industry. Academic researcher Sritkant Parthasarathy explored the competitive forces in Indian business industry. Sritkant found state protectionism and lack of infrastructure to be barriers to entry in an Indian industry. He also found suppliers in developing countries could pressure incumbents by providing low quality products. Moreover, buyers are fixated and sensitive to price of a product than quality of a product. Carle, Axhausen and Wokaun studied the competitive forces in the fuel cell market using Porter’s Five Forces. These researchers modified Porter’s Five Forces to include three additional competitive forces namely infrastructure and fuel, government policy and investments. The found market penetration of fuel cell technology is heavily dependent on government incentives and subsidies. This means new technologies, which do not have government backing, might have a very high time penetrating a market with deeply entrenched incumbents like the U.S. oil industry. Prescott and Grant evaluated 21competitive strategies including Porter’s Five Forces. They found Porter’s Five Forces is costly for small business. Each research project for studying the competitive market forces takes $10,000 to $50,000. Both researchers advocated use of Case study, personal interviews and literature search to collect data for Porter’s Five Forces. Prescott and Grant also stated the accuracy of Porter’s Five Forces is highly dependent upon the technical, interpersonal, conceptual, diagnostic and analytical skills of the analyst. 2 Description Porter's Five Forces analytical technique is a methodology used for analyzing the competitive forces in any market and helping the strategy analyst formulate a competitive winning strategy for the enterprise. Porter's Five Forces analytical method was created by Harvard Business School professor, Michael Porter, to analyze the attractiveness and likely-profitability of an industry and how a company can formulate a winning strategy to take advantage of the market forces within that industry. Since publication, it has become one of the most important business strategy tools. The classic article, which introduces it, is "How Competitive Forces Shape Strategy “in Harvard Business Review 57, March – April 1979, pages 86-93. Given below is the diagram depicting Porter's Five forces that shape industry competition. Figure 1 Porter's Five Forces that shape industry competition Porter’s five forces are threat of new players in the market, bargaining power of the suppliers, bargaining power of the buyers, threat of substitute services, and rivalry amongst existing competitors in the market place. Analyst can apply the Porter’s Five Forces using the steps given below: Threat of new entrants to an industry: New entrants into an industry start price wars, gain market share and bring disruptive technology into the industry. The power of suppliers in an industry: Suppliers have power in an industry, if they supply unique product not found elsewhere. 3 The power of buyers in an industry: Buyers can be very powerful and companies typically have very low negotiating power against strong buyers. Strong buyers can also set prices and play one competitor against another competitor. Threat of substitute Services/Products: An industry competitive structure is affected by introduction of a substitute service/product. Rivalry among existing competitors: Rivalry amongst competitors in a market space can affect profitability in the industry and make it unattractive for new entrants into the market space. Established competitors with highly successful examples of past performance can be very hard to dislodge. Porter's Five Forces analytical methodology can be used by an intelligence analyst in analyzing strategic intelligence problems. For example a U.S. intelligence analyst at the office of Director of National Intelligence (DNI) economic section can provide a competitive strategy for making U.S. companies more competitive in a Chinese or Indian markets thereby gaining a foothold in both these markets, or vice versa analyze how Chinese and Indian companies are using competitive forces in U.S. market to gain a foothold in the U.S. market space. The strength of the Porter's Five Forces analytical methodology is how it allows the analyst to analyze buyer power in an industry, threat of new entrants in an industry, bargaining power of suppliers, threat of substitute products, and rivalry amongst existing competitors. By analyzing all the five forces shown above, the strategy analyst can keep the overall structure of the industry in mind instead of focusing on any one force. Porter's Five Forces analytical methodology can assist in forecasting the competitive strategy of a firm in any market space. By studying the competitive forces in a market, the analyst can perform a more reliable job of forecasting the competitive positions of any enterprise in any industry. The Porter Five Forces analytical methodology can be a powerful tool in the toolbox of an intelligence analyst performing economic analysis of rival nation enterprises. The weakness of Porter's Five Forces analytic method is that the strategy analyst can misuse Porter’s Five Forces method to undermine the industry structure, creating new types of competition, which do not allow any company to win in the industry. The strategy analyst can also mistake certain attributes of the industry as its underlying forces for example; government regulation is not a one of the Porter’s Five Forces in an industry but a factor influencing the Porter’s Five Forces. (Porter, 2008) Sources: Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr 4 Strengths and Weaknesses Strengths Strategy analyst can effectively analyze buyer power in an industry: Porter's Five Forces analytical method allows the analyst to analyze the buyer's market influence and power. Strong buyers have the ability to manipulate the industry and initiate price wars between industry players. Strategy analyst can effectively analyze threat of new entrants in an industry: Porter's Five Forces analytical method allows the analyst to analyze the threat of new entrants in an industry. If barriers to entry are low for an industry, for example in internet banking, then every new company with a stellar idea can be successful in the industry. Low barriers of entry can be bad for incumbent players in the market place and good for new companies wanting to enter the market place. Strategy analyst can effectively analyze bargaining power of suppliers: Porter's Five Forces analytical method allows the analyst to analyze the bargaining power of suppliers. In cases like computer chip manufacturers who have rely heavily on silicon manufacturers, the suppliers can be very powerful and will use their power to sell products at above market rates. In other industries like professional services firms, there are no strong suppliers as the professional services firms market their human capital. In addition, human capital can be easily found in most instances. Strategy analyst can effectively analyze threat of substitute products : Porter's Five Forces analytical method allows the analyst analyze the threat of substitute products. If substitute products exist in the market, for example how many different types of facial soaps are being sold in the U.S. supermarket at least ten dollars? The large number of choices in facial soaps creates a powerful competition amongst the soap producing companies. The only way such companies can be successful is via differentiation and price competition. Strategy analyst can effectively analyze rivalry amongst existing competitors: Porter's Five Forces analytical method allows the analyst to effectively analyzed rivalry existing amongst competitors. If there is strong rivalry amongst competitors for example between Intel Corporation and AMD Corporation, both producing computer-processing chips (CPU) for computers. The rivalry between incumbents in a market place can typically lead to price wars, which damage both competitors. Normally it is seen that competitors follow certain rules allowing both competitors to have a market share in the industry. It is rare to see a sole incumbent in a market place, such a position in the market place is not viable for long, and usually a competitor comes along to upset the sole incumbent in the market place. Structured Approach: Strategy analyst has a structured approach to examine competitive forces affecting industries. Basis for other in-depth analysis: Porter’s Five Forces analytical method provides additional information for an in-depth analysis. 5 Weaknesses Strategy analyst can use Porter’s Five Forces method to undermine the industry structure, creating new types of competition, which do not allow any company to win in the industry. Strategy analyst can mistake certain attributes of the industry as its underlying forces for example; government regulation is not a one of the Porter’s Five Forces in an industry but a factor influencing the Porter’s Five Forces. Michael E. Porter the author of Porter's Five Force's analytical techniques provided the above strengths and weakness of Porter’s Five Forces. Sources: Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr 6 How-To Use Porter’s Five Forces analytical method: The following five steps shown below depict how to apply Porter’s Five Forces analytical model to any intelligence problem. In all five steps shown below the analyst will use research tools like strategic business intelligence databases, open source internet research, interviews with industry experts, focus groups, market/consumer surveys and financial reports to gather competitive information about market forces. Examples of strategic business intelligence databases could be LexisNexis, Dun & Bradstreet, Frost & Sullivan, Gartner, Global Insight, Stratfor, and Plunkett Research. A pictorial model of the Porter's Five Forces analytical model is given below: Figure 2 Pictorial representation of Porter's Five Forces 7 Step #1 Analyze barriers to entry into an industry: Use research tools to find the sources of barriers to entry into an industry. Analyst could focus on barriers to entry in an industry for example; economics of scale, product differentiation, capital requirement and switching costs. Step #2 Analyze bargaining power of buyers in an industry: Use research tools find out the buyer’s influence and power in the industry. Analyst could examine buyer influence by looking at volumes purchased by the buyers, differentiation in products and switching costs. Step #3 Analyze bargaining power of suppliers in an industry: Use research tools to find out the supplier’s influence and power in the industry. Analyst could examine supplier influence and power by checking the number of suppliers, lack of substitute products in the industry and how important is the supplier’s product to the firm. Step # 4: Analyze threat of substitute products: Use research tools to find the threat of substitute products in the industry. Analyst can examine if there are substitute products in the industry, what are their pricing in the industry. Step # 5: Analyze intensity of rivalry among existing competitors: Use research tools to find the intensity of rivalry amongst existing competitors. Analyst can examine if there is intense rivalry amongst existing competitors in the market. Intense competitor rivalry can trigger damaging price wars in the industry. Step # 6: Compile all five forces into Porter’s Five Forces frame work: Compile all five forces shown above into Porter’s Five Forces analytical framework for better understanding. Identify the most powerful and threatening competitive market force preventing your company from being successful in the market place. Formulate a competitive strategy against the most imminent market threat to your company. Step # 7: Identify industry opportunities using Porter's Five Forces framework: Repeat the process with your own company as the subject and identify opportunities in the last step instead of threats. Sources: Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr 8 Personal Test Case I applied Porter’s Five Forces analytical method on the analytical question “Is company TNISO in a position to win contracts for Open Source Intelligence services focusing on the Middle East and South East Asia with Central Command?” I used the following three criteria to evaluate the Porter's Five Forces: Formulation of competitive business strategy: Formulate a competitive business strategy to win contracts in CENTCOM market. Repeatability: Repeatability of using Porter's Five Forces method in other markets Ease of use: How easy is it to create a potential winning business strategy using Porter's Five Forces method, Porter's Five Forces analytic method is the most appropriate method to critically analyze a potential market space like U.S. Central Command and produce a winning strategy on how to capture a market segment in this market. The following seven steps will depict how I applied Porter’s Five Forces analytical method on the analytical question. Step #1 I researched and analyzed barriers to entry into USCENTCOM market space: I used specialized research tools such as Figure 3 to find the sources of barriers to entry into an industry. Analyst could focus on barriers to entry in an industry for example; economics of scale, product differentiation, capital requirement and switching costs. Step 1 partially fulfilled the first criteria; it partially helps in the formulation of successful competitive strategy in an industry. Step 1 also successfully fulfilled the repeatability criteria. Step 1 scored low in the third criteria; the collection of data for barriers into an industry is not an easy task. Figure 3 Specialized databases used to perform literature search for Porter's Five Forces analytical method Step #2 I researched and analyzed the bargaining power of a single buyer the U.S. Government. I used research tools shown in figure 3 to find out the U.S. government’s influence and power in 9 the industry. I examined U.S. Government influence by looking at volumes purchased by the U.S. Government, differentiation in products and switching costs. In our personal case the there is a singular very strong buyer with strict regulations i.e. U.S. Government. Step 2 partially fulfilled the first criteria; it partially helps in the formulation of successful competitive strategy in an industry. Step 1 also successfully fulfilled the repeatability criteria. Step 2 scored low in the third criteria; the collection of data for barriers into an industry is not an easy task. Step #3 I analyzed bargaining power of suppliers in an industry: I used specialized research tools to find out the supplier’s influence and power in the industry. For my personal test case, there are no suppliers as in my personal case we are providing professional services to a single buyer the U.S Government. My analytical question is providing professional services not a product to the U.S. Government. Step 3 partially fulfilled the first criteria; it partially helps in the formulation of successful competitive strategy in an industry. Step 3 also successfully fulfilled the repeatability criteria. Step 3 scored low in the third criteria; the collection of data for barriers into an industry is not an easy task. Step # 4: I analyzed threat of substitute products in the USCENTCOM market. I used specialized research tools to find the threat of substitute products in the industry. I researched and examined if there are substitute products in the industry, what are their pricing in the USCENTCOM industry. Step 4 partially fulfilled the first criteria; it partially helps in the formulation of successful competitive strategy in an industry. Step 4 also successfully fulfilled the repeatability criteria. Step 4 scored low in the third criteria; the collection of data for barriers into an industry is not an easy task Step # 5: I analyzed the intensity of rivalry among existing competitors in the USCENTCOM market space. I used specialized research tools shown in figure 4 to find the intensity of rivalry amongst existing competitors. I researched and examined if there is intense rivalry amongst existing competitors in the USCENTCOM market space. Intense competitor rivalry can trigger damaging price wars in the industry. Step 5 partially fulfilled the first criteria; it partially helps in the formulation of successful competitive strategy in an industry. Step 5 also successfully fulfilled the repeatability criteria. Step 5 scored low in the third criteria; the collection of data for barriers into an industry is not an easy task 10 Figure 4 Centurion research solutions specialized research website used to collect and analyzed rivalry amongst incumbents in an industry Step # 6: I compile all five forces into Porter’s Five Forces framework shown in figure 2. I Identified the most powerful and threatening competitive market force preventing TNISO from being successful in the USCENTCOM market place. I formulated a competitive strategy to counter the most imminent market threat to TNISO. Strategies to counter the strongest competitive forces could be price leadership, service differentiation, increased focus or a combination of all three strategies. Step 6 partially fulfilled the first criteria; it partially helps in the formulation of successful competitive strategy in an industry. Step 6 also successfully fulfilled the repeatability criteria. Step 6 scored low in the third criteria; the collection of data for barriers into an industry is not an easy task Step # 7: I identified industry opportunities using Porter's Five Forces framework shown in figure 2. You would repeat the process with your own company as the subject and identify opportunities in the last step instead of threats. Step 7 fully fulfilled the first criteria; it partially helps in the formulation of successful competitive strategy in an industry. Step 7 also successfully fulfilled the repeatability criteria. Step 7 scored low in the third criteria; the collection of data for barriers into an industry is not an easy task Porter’s Five Forces analytical method completely fulfilled the first criteria, which called for a successful formulation of competitive strategy in an industry. Porter Five Forces analytical method also fulfilled the second criteria, which called for the analytical method to be used in other industries. Porter’s Five Forces scored low in the third criteria i.e. ease of use. Porter’s Five Forces is not recommended for small companies with limited research budget. Primary challenge in using Porter’s Five Forces was the time taken to collect, analyze and dissemination of information. To overcome this challenge I had used specialized research websites with paid subscription. 11 For Further Information Please consult the following resources given below for further information pertaining Porter’s Five Forces analytical technique. Porter, Michael E. (1998). Competitive strategy: techniques for analyzing industries and competitors. New York, New York: Free Press. Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy - Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from http://hbr.org/2008/01/the-fivecompetitive-forces-that-shape-strategy/ar/pr Porter, M., How Competitive Forces Shape Strategy. Harvard Business Review, March-April (1979), p. 8. Prescott, J. E., & Grant, J. H. (1988). A Manager's Guide for Evaluating Competitive Analysis Techniques. Interfaces, 18(3), 10-22. Retrieved from EBSCOhost. 12 Annex 1. Detailed Literature Review Given below are seven detailed literature reviews defining what is Porter’s Five Forces analytical technique and then providing examples of how Porter's Five Forces have been used to research competitive forces in a industry. After researching the competitive forces in an industry, a winning strategy is formulated to gain a winning position in the market. Leadership and differentiation strategies are also used to counter the competitive forces in an industry. The Five Competitive Forces That Shape Strategy Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy - Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from http://hbr.org/2008/01/the-fivecompetitive-forces-that-shape-strategy/ar/pr Name of Analytic Technique Porter’s Five Forces Purpose The purpose of this article is to inform and advocate the use of Porter's Five Forces analytical technique in formulation of a competitive strategy. We create the competitive strategy formulated by analyzing the underlying five forces in an industry. In this article, the creator of Porter’s Five Forces analytic technique economist and Harvard University professor Michael E. Porter advocates and reaffirms the workings of the Porter’s Five Forces analytic technique. Strengths and Weaknesses Strengths: 1. Analyzes buyer power in a industry 2. Analyzes threat of new entrants in a industry 3. Analyzes bargaining power of suppliers 4. Analyzes threat of substitute products 5. Analyzes rivalry amongst existing competitors 6. By considering all the five forces shown above, the strategy analyst can keep the overall structure of the industry in mind instead of focusing on any one force. Weaknesses: 1. Strategy analyst can use Porter’s Five Forces method to undermine the industry structure, creating new types of competition, which do not allow any company to win in the industry. 2. Strategy analyst can mistake certain attributes of the industry as its underlying forces for example; government regulation is not a one of the Porter’s Five Forces in an industry but a factor influencing the Porter’s Five Forces. 13 Description Strategy analyst use’s Porter’s Five Forces analytical technique to create a competitive strategy that takes into account the competitive forces in the industry. The competitive strategy will help the company maintains its leadership in the industry and safeguard the company from attack by rival competitors. Porter’s five forces are threat of new players in the market, bargaining power of the suppliers, bargaining power of the buyers, threat of substitute services, and rivalry amongst existing competitors in the market place. A brief overview of Porter’s Five Forces is given below. 1. Threat of new entrants to an industry: New entrants into an industry start price wars, gain market share and bring disruptive technology into the industry. For example, Netflix an online movie rental company has gained market share from Blockbusters a chain of video/game rental outlets. If barriers to entry into an industry are high, it becomes very difficult for new entrants to gain market share. Government policy can become a major barrier to entry into certain intelligence markets can only be served by U.S. companies with U.S citizen employees. A small company providing open source intelligence services to the U.S. Central Command market space will need to examine the barriers of entry into market. 2. The power of suppliers in an industry: A professional services company treats its employees as input. The employees or suppliers for U.S. Central Command typically have to be U.S. citizens with high-grade security clearances. Such a small pool of input to a company can put pressure on the company to be competitive in an industry. 3. The power of buyers in an industry: U.S. Central Command or U.S. government is a very powerful buyer in the defense contracting industry. Companies typically have very low negotiating power with such strong buyer. Strong buyers can also set prices and play one competitor against another competitor. 4. Threat of substitute Services/Products: An industry competitive structure is affected by introduction of a substitute service/product. For example, small women owned business Alaska based business employing in contract un-cleared employees in theater supplying open source intelligence to U.S. Central Command could take away market share from U.S. based company with cleared employees. 5. Rivalry among existing competitors: Rivalry amongst competitors in U.S. Central Command market space can affect profitability in the industry and make it unattractive for new entrants into the market space. Established competitors with highly successful examples of past performance can be very hard to dislodge. Examples are defense contractors who are prime contractors on U.S. Central Command contracts. Steps to create a competitive strategy: Analyze supplier bargaining power in U.S. Central Command market space. Analyze buyer bargaining power in U.S. Central Command market space. Analyze threat of new entrants in U.S. Central Command market space. Analyze threats of substitutes in U.S. Central Command market space. Analyze rivalry amongst competitors in U.S. Central Command market space. 14 The strategy analyst will analyze all the five forces in the industry by performing market research, talking to suppliers, buyers, examining substitute services/products and looking at competitive analysis of incumbents in the industry. USES: Analysts can apply Porter’s Five Forces analytical technique to create a competitive strategy in virtually any industry. We create a competitive strategy after performing analysis of the five competitive forces driving market competition in any industry. Comparison Comparison is not required as this is the first source critique. Sources Cited The author has listed the following sources given below. Adam M. Brandenburger and Barry J. Nalebuff, Co-opetition (Currency Doubleday, 1996 Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (The Free Press, 1998) Michael E. Porter, “Strategy and the Internet” (HBR, March 2001). Most Informative The most informative item of this source is the detailed explanation of what is Porter's Five Forces analytical method, how can it be applied to formulate a competitive strategy in any industry, what are the pitfalls to avoid and benefits of using this method. Source Author Michael E. Porter is the author of this article. Mr. Porter is also the creator of the Porter’s Five Forces analytic method. Mr. Porter is very qualified to talk objectively about this analytic method as he has created this method and used it extensively in various industries. Source Reliability Dax Norman’s trust evaluation worksheet is not used to check the source reliability, as this is not an online web source, but an article written by the creator of the Porter’ Five Forces analytical technique. Critique Author Fuad Khan fuadkhan@yahoo.com Mercyhurst College Erie PA Advanced Analytic Techniques Course 12/19/2010. Link to my wiki: http://intel520.wikispaces.com/ 15 Use of Leadership and Differentiation Strategies by Professional Service Firms: A Case Study Wei-Ming, O., & Kang-Wei, C. (2007). Use of Leadership and Differentiation Strategies by Professional Service Firms: A Case Study. International Journal of Management, 24(3), 477488. Retrieved from Business Source Elite database. Name of Analytic Technique Porter's Five Forces Purpose The purpose of the article is to study the strategic positioning of a transportation engineering services firm in the Taiwanese public sector market space. Strengths and Weaknesses The strategic researchers Wei-Ming and Kang-Wei did not list any strength or weakness of the Porter's Five Forces analytical method in their case study. Description Strategic researchers Wei-Ming and Kang-Wei obtained a comprehensive understanding of competitive market forces affecting professional transportation engineering firm in the Taiwanese public sector market space using the Porter's Five Forces analytical method. Uses This case demonstrates that Porters Five Forces can be used to analyze the market forces influencing the transportation industry. Comparison The strategic researchers Wei-Ming and Kang-Wei used Porter’s Five Forces in their case study of analyzing the market forces in Taiwanese transportation engineering industry. The first source critique article found at Porter, Michael, E. (2008). The Five Competitive Forces That Shape Strategy - Harvard Business Review. (pg 79-93). Retrieved December 2, 2010, from http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/pr. Described how to use the Porter's Five Forces analytical technique by the technique's author. Most Informative The article helped me understand the following points: A. Cost leadership is essential for professional services firms selling to strong buyers. B. Service differentiation is very important for professional services firm, in order for them to stand out from the crowd. C. New professional services firms usually lack experience and human capital to bid for large projects. They may need sub-prime partners in a contract. 16 D. Professional services firms impacted by competitor rivalry. Competitor use price reduction, service enhancement and social networks to win contracts. E. The powerful buyer is the single most important threat to a professional transportation engineering services firm in Taiwanese public sector market. F. Results compiled by strategic researchers Wei-Ming and Kang-Wei can be re-used by other strategy analysts in other professional transportation engineering services firms in other countries and markets. G. Porter's Five Forces methodology takes a time to research market forces and is not viable for very short lead-time projects. H. Porter's Five Forces methodology is more useful on strategic level and should not be used on a tactical level. Source Author The two authors of this article are strategic researchers Wei-Ming and Kang-Wei who have performed an in-depth strategic analysis of a professional transportation-engineering firm located in Taiwan. The strategic researchers have used both the SWOT and Porter's Five Forces methodology to formulate recommendations for professional transportation engineering services firms. Source Reliability The source rated to have high credibility according to Dax Norman trust scale. Sources Cited Bailey, A. A. (2005). Non-fulfillment of promotional deals: the impact of gender and company reputation on consumers' perceptions and attitudes. Journal of Retailing and Consumer Services, 12 (4), 285-295. Balmer, J. M. T. (1995). 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Northwestern University, Evanston, IL. 18 Ou, W.-M., Abratt, R,, & Dion, P, (2006), The influence of corporate reputation on store patronage. Journal of Retailing and Consumer Services, 13(3), 221-230. Pearce, J, A, & Robinson, J, B, (2003), Strategic Management: Formulation, Implementation and Control (8th ed,) New York: Irwin McGraw-Hill. Pennings, J, M,, Lee, K,, & Van Witteloostuijn, A, (1998), Human capital, social and firm dissolution. Academy of Management Journal, 41 (4), 425-440. Porter, M. E, (1979), How competitive forces shape strategy. Harvard Business Review, 57(2), 137-145. Porter, M, E, (1980), Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: The Free Press. Porter, M, E, (1985). Competitive Advantage: Creating and Sustaining Superior Performance, New York: The Free Press. Porter, M, E, (1996), What is strategy? Harvard Business Review, 74(6), 61-78 Porter, M, E, (2001), Strategy and the Internet, Harvard Business Review, 79(3), 63-78. Ray, G,, Barney, J. B,, & Muhanna, W, A, (2004), Capabilities, business processes, and competitive advantage: Choosing the dependent variable in empirical tests of the resource-based view. Strategic Management Journal, 25(1), 23-37. Robinson, R, B,, & Pearce, J, A, (1988). Planned patterns of strategic behavior and their relationship to business unit performance. Strategic Management Journal, 9(1),43-60. Sager, J. K,, Griffeth, R, W, & Hom, R M, (1998), A comparison of structural models representing turnover cognitions. Journal of Vocational Behavior, 53, 254-273. Schroeder, R, G,, Bates, K. A,, & Junttila, M. A. (2002). A resource-based view of manufacturing strategy and the relationship to manufacturing performance. Strategic Management Journal, 23(2), 105-117. Siaw, I., & Yu, A. (2004). An analysis of the impact of the internet on competition in the banking industry: Using Porter's five forces model. International Journal of Management, 21(4), 514-523. Skaggs, B. C, & Youndt, M. (2004). Strategic positing, human capital, and performance in service organizations: A customer interaction approach. Strategic Management Journal, 25(1), 85-99. 19 Skeese, M. E. (2002). A strategic analysis of United Parcel Service. Journal of Applied Management and Entrepreneurship, 7(4), 108-126. Umble, M., & Umble, E. (2000). Managing your projects for success: An application of the theory of constraint. Production and Inventory Management Journal, 41 (2),27-32. Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of Marketing Theory and Practice, 9(2), 54-69. Van Riel, C. B. M., & Balmer, J. M. T. (1997). Corporate identity: The concept, its measurement and management. European Journal of Marketing, 31(5/6), 340-355. Vining, A. R., Shapiro, D. M., & Borges, B. (2005). Building the firm's political strategy.Journal of Public Affairs, 5(2), 150-175. Critique Author Fuad Khan fuadkhan@yahoo.com Mercyhurst College Erie PA Advanced Analytic Techniques Course 01/06/2011 Link to my wiki: http://intel520.wikispaces.com/ 20 An Analysis of the Impact of the Internet on Competition in the Banking Industry, using Porter's Five Forces Model Siaw, I., & Yu, A. (2004). An Analysis of the Impact of the Internet on Competition in the Banking Industry, using Porter's Five Forces Model. International Journal of Management, 21(4), 514-523. Retrieved from Business Source Elite database. Name of Analytic Technique Porter's Five Forces Purpose Academic researchers Irene Siaw and Alec Yu wrote a paper on the emergence of the internet on the competitive landscape of the banking industry. Both researchers advocate harnessing the power of the internet in the banking industry. Strengths and Weaknesses Academic researchers Irene Siaw and Alec Yu did not discuss the strengths and weaknesses of the Porter's Five Forces analytical model. Description Academic researchers Irene Siaw and Alec Yu studied how the internet was affecting competitive dynamics of banking industry using the Porter's Five Forces analytical method. Uses This case demonstrates that Porters Five Forces can be used to analyze the market forces influencing the internet banking industry. Comparison This article is similar in methodology to the used by strategic researchers Wei-Ming and KangWei (Wei-Ming, O., & Kang-Wei, C. (2007). Use of Leadership and Differentiation Strategies by Professional Service Firms: A Case Study. International Journal of Management, 24(3), 477488. Retrieved from Business Source Elite database.). The authors of both articles have practically applied Porter's Five Forces to study the competitive forces present in Taiwanese professional services industry and the banking industry. Both the articles present clear instructions on how to apply Porter's Five Forces analytical technique. Most Informative I found the following items most informative in this article, which I can also use, in my final project. 1. Porter's Five Forces analytical method can also be used in dynamic evolving industries to formulate a competitive strategy. Using Porter's Five Forces the academic researchers Irene Siaw 21 and Alec Yu advocated the use of internet banking long before it became a successful and widely used technology. 2. Internet has lowered the barriers of entry in most industries. With direct access to customers and a more economical alternative distribution channel. 3. Product differentiation is very important otherwise, it is easy for the buyer to switch products. This fact is also reinforced by article by strategic researchers Wei-Ming and Kang-Wei (WeiMing, O., & Kang-Wei, C. (2007). Use of Leadership and Differentiation Strategies by Professional Service Firms: A Case Study. International Journal of Management, 24(3), 477488. Retrieved from Business Source Elite database.). Source Author Academic researchers Irene Siaw and Alec Yu are the authors of this paper. Irene Siaw is an academic researcher and Alec Yu works as head of Cisco Systems Wireless division Hong Kong. Alec Yu as a Cisco Systems executive a company whose routers power the internet is in a unique position to study the impact of the internet on competitive landscape of the banking industry. Source Reliability The source rated to have high credibility according to Dax Norman trust scale. Sources Cited Birch, D & Young, M.A., Financial Services and the Internet - What Does Cyberspace Mean for the Financial Service Industry? Internet Research: Electronic Networking Applications and Policy, Vol. 7(1997), No.2, pp. 120-128. Brennand, C, Next Steps in Financial E-Services in Asia - Lessons from other Market. Internet World Hong Kong, Financial Services Summit Nov 1999. Cisco Systems Inc., Internet Business Solutions Group. The Banking Industry and the Internet A View of the Impact of Internet Business Models on the Future of Banking, July 1999. Crede, A., International Banking and the Internet in Cronin, M.J. (Ed.), Banking and Finance on the Internet, Van Norstrand Reinhold, New York, NY, pp. 271-305, 1998. Czemiawska, F. & Potter, G., Business in a Virtual World - Exploiting Information for Competitive Advantage, Macmillan Business, 1998. Engelman, L., Interacting on the Internet, Times Mirror Higher Education Group, Boston, MA, 1996. 22 Emst & Young, E-Commerce: Customer Relationship Management. Special Report on Technology in Financial Services, 1999a. Emst & Young, FS Internet Value Creation Study, 1999b. FIND/SVP (1997), http://www.findsvp.com. Humphreys, K., Banking on the Web - Security First Network Bank and the development of Virtual Financial Institutions in Cronin, M.J. (Ed.), Banking and Finance on the Internet, Van Norstrand Reinhold, New York, NY, pp. 75-105, 1998. Kalakota, R. & Whinston, A., Electronic Commerce -A Manager's Guide, Addison- Wesley Longman, USA, 1997. Kiesnoski, K., Cyberbanks: Creating a Market Niche? Bank Systems & Technology, New York, Vol. 36 (1999), No.5, pp. 30-36. Mols, N., The Intemet and the Banks' Strategic Distribution Channel Decisions. Internet Research: Electronic Networking Applications and Policy, Vol.8 (1998), No.4, pp. 331 - 337. Porter, M., How Competitive Forces Shape Strategy. Harvard Business Review, March-April (1979), p. 8. Porter, M., On Competition, Harvard Business School Press, Boston, 1998. Sheshunoff, A. The wait is over for Internet Banking, ABA Banking Journal, New York, Vol. 91 (1999), No.6, pp. 18-24. Starita, L., Online Banking: A Strategic Perspective, Financial Service SMART Report Library, July 1999. Watson, R.T., Berthon P., Pitt, L.F., & Zinkhan G.M., Electronic Commerce: The Strategic Perspective, Orlando, FL: The Dryden Press, 2000 Critique Author Fuad Khan fuadkhan@yahoo.com Mercyhurst College Erie PA Advanced Analytic Techniques Course 01/15/2011 Link to my wiki: http://intel520.wikispaces.com/ 23 Mobile E-Commerce outlook Yeo, J., & Huang, W. (2003). Mobile E-Commerce Outlook. International Journal of Information Technology & Decision Making, 2(2), 313. Retrieved from Academic Search Complete database. Name of Analytic Technique Porter's Five Forces Purpose Academic researchers Julia Yeo and Wayne Huang wrote a paper to identify and explore potential business models in the mobile commerce industry using Porter's Five Forces analytical model. Strengths and Weaknesses Two strengths of the Porter's Five Forces analytical model mentioned by the academic researchers Julia Yeo and Wayne Huang. One the Porter's Five Forces analytical model provided a complete evaluation of the mobile commerce industry. Secondly, the Porter's Five Forces analytical model helped forecast areas of mobile commerce industry suitable for investment by firms seeking to gain a market share of the mobile commerce industry. The academic researchers did not discuss any weakness of the Porter's Five Forces model. Description Academic researchers Julia Yeo and Wayne Huang used Porter's Five Forces method to look at competitive market forces present in the mobile commerce industry. The academic researchers also used Porter's Five Forces to formulate a competitive strategy to gain a market share in the mobile commerce industry. Uses This paper demonstrates that Porter's Five Forces analytical method can be used to analyze the market forces influencing the mobile commerce industry. Comparison There is an interesting similarity between this paper and the study performed by strategic researchers Wei-Ming and Kang-Wei (Wei-Ming, O., & Kang-Wei, C. (2007). Use of Leadership and Differentiation Strategies by Professional Service Firms: A Case Study. International Journal of Management, 24(3), 477-488. Retrieved from Business Source Elite database.) Both the researchers used strength, weakness, opportunities, threats (SWOT) model in conjunction with the Porter's Five Forces analytical method. Julia and Wayne used the Porter's Five Forces analytical method to research the threats for their SWOT model. Most Informative Some of the informative takeaways from this article were 24 Brand names can be significant barrier to entry into an industry. It is very hard to capture market share from established industry players with established brand name. There is a grave almost fatal impact to a business if we create in-correctly identify the wrong competitive forces in the industry and use those in Porter's Five Forces analytical model. As the academic authors in the paper, stated the mobile commerce industry should not duplicate the competitive forces existing in electronic commerce industry. Instead, the researchers should find key differentiators like location awareness, which makes mobile commerce industry radically different from electronic commerce industry. The paper also points to lack of data from other mobile operators in other countries to get a more diverse view and different of global mobile commerce industry. This is a very important observation, as mobile industry has leapfrogged over traditional landline internet in third world countries where landline internet is too expensive to install due to both monetary reasons and geographic reasons. In most African countries, mobile commerce like banking and money transfer is performed via cell phones. In Afghanistan, most government employees are paid monthly via cell phones. Mobile commerce will also expand with revolutionary devices like Apple Ipad, which allow a bigger screen and more features useful for mobile commerce. Source Author Academic researchers Julia Yeo and Wayne Huang are the authors of this paper. Julia Yeo is an academic student at The University of New South Wales, Australia. In addition, Wayne Huang is an academic student at Ohio University, USA. Source Reliability The source rated to have high credibility according to Dax Norman trust scale. Sources Cited Anonymous, Corporate Profile [Online] http://www.nttdocomo.com/company/index.html, 29 September 2001. Anonymous, What is 3G? [Online] http://www.3gnewsroom.com/html/what is 3g/index.shtml 28 September 2001. B. Bachelder, Behind the numbers: E-business communication gets personal, InformationWeek, 7 August 2000. R. Batni, C. C. Lee and D. W. Verney, Enhanced services in WAP-enabled networks, Bell Labs Technical J. (2000) 145-152. A. de Haan, The internet goes wireless, eAI J. (April, 2000) 62-63. 25 S. Eklund and K. Pessi, Exploring mobile e-commerce in geographical bound Retailing, Proc. 34th Hawaii Int. Conf. System Sciences, 2001. X. Geng and A. Whinston, Profiting from value-added wireless services, Computer 34, 8 (2001) 87-89. M. Giometti, M. Whitehead, D. Regas and W. Shipley, Create a mobile commerce models for financial service industry, Server world 15, 8 (2001) 24-25. M. McGinity, Flying wireless, with a net, Communication. ACM 42, 12 (1999) 19-21. B. E. Mennecke and T. Strader, Where in the World does location matter? A framework for location based services in M-Commerce, Seventh Americas Conf. Information Systems (2001) 450-455. L. B. Methlie and H. Nysveen, Loyalty of on-line bank customers, J. Information Technology 14, 4 (1999) 375-386. M. E. Porter, How competitive forces shape strategy, Harvard Business Review 57, 2 (1979) 137-175. M. E. Porter, Competitive Strategy for Analyzing Industries and Competitors (New York, 1980). M. E. Porter, Competitive Advantage (Free Press, New York, 1985). Price Waterhouse Coopers, Technology Forecast: 2001{2003 [CD-ROM], 2001. M. Prior, M-commerce infancy no day in the park, DSN Retailing Today, New York, 40, 16 (2001) 34{35. P. B. Seybold, Customers.com (Random House, Australia, 1998). J. A. F. Stoner, P. W. Yetton, J. F. Craig and K. D. Johnston, Management, 2nd edition. (PrenticeHall, Australia, 1994), Chap. 5. A. Tausz, Customizing your world, CMA Management 75, 2 (1998) 48{51. The Straits times Interactive, ERP system may be controlled from space [On-line] Available: http://straitstimes.asia1.com.sg/storyprintfriendly/0,1887,141389,00.html. (Accessed 9 September 2002). U. Varshney and R. Vetter, A framework for the emerging mobile commerce applications, Proc. 34th Hawaii Int. Conf. System Sciences | 2001, IEEE 2001. 26 U. Varshney and R. Vetter, Emerging mobile and wireless networks, Communication. ACM 43, 6 (2000) 73-81. WAP Forum FAQs, Retrieved November 14, 2001, from http://www.wapforum.com/faqs/index.html Critique Author Fuad Khan fuadkhan@yahoo.com Mercyhurst College Erie PA Advanced Analytic Techniques Course 01/22/2011 Link to my wiki: http://intel520.wikispaces.com/ 27 Business strategy Parthasarathy, S. (2010). BUSINESS STRATEGY. Financial Management (14719185), 32-33. Retrieved from Business Source Elite database. Name of Analytic Technique Porter's Five Forces Purpose Academic researcher Sritkant Parthasarathy wrote a paper to inform the readers about the competitive forces in Indian business industry using Porter’s Five Forces analytical methodology. Strengths and Weaknesses The author in his paper did not discuss strengths and weakness of Porter's Five Forces analytical method. Description Academic researcher Sritkant Parthasarathy used Porter's Five Forces method to look at competitive market forces present in the Indian business industry Uses This paper demonstrates that Porter's Five Forces analytical method can be used to analyze the market forces influencing the Indian business industry. Comparison Current article (Parthasarathy, S. (2010). BUSINESS STRATEGY. Financial Management (14719185), 32-33. Retrieved from Business Source Elite database) is different from the study performed by strategic researchers Wei-Ming and Kang-Wei (Wei-Ming, O., & Kang-Wei, C. (2007). Academic researcher Srikant Parthasarathy is performing a country analysis of India. Whereas Wei-Ming and Kang-Wei are performing a professional services sector analysis in Taiwan. Sources Cited The academic researcher has not provided any sources for his article. The academic researcher Sritkant Parthasarathy has published original work in a peer reviewed journal financial management. I evaluated the author's source reliability and high validity (39.5) based on the Dax Norman's trust evaluation scale. Most Informative Some of the informative takeaways from this article were as given below: State protectionism and lack of infrastructure could be barriers to entry into an industry. 28 Suppliers in developing countries could pressure on the incumbents by providing low quality products, which are delivered very fast. Opposed to developed countries where suppliers are all producing high quality products. Buyers are fixated more on price than quality in developing countries. Competition amongst competitors is virtual than real in developing countries. Incumbents have a strangle hold on the market and are almost impossible to remove. Competition is also tiered and is most intense at the lowest levels, and there is almost an absence of competition at the top. Source Author Academic researcher Sritkant Parthasarathy is head of Chakra Consulting and visiting professor of strategy at Christ University. Source Reliability The source rated to have high credibility according to Dax Norman trust scale. Trust scale = 39.5 Critique Author Fuad Khan fuadkhan@yahoo.com Mercyhurst College Erie PA Advanced Analytic Techniques Course 01/29/2011 Link to my wiki: http://intel520.wikispaces.com/ 29 Opportunities and Risks during the Introduction of Fuel Cell Cars Carle, G., Axhausen, K. W., Wokaun, A., & Keller, P. (2005). Opportunities and Risks during the Introduction of Fuel Cell Cars. Transport Reviews, 25(6), 739-760. Name of Analytic Technique Porter's Five Forces Purpose Academic researchers Gian, K.W, Alexander and Peter wrote a paper to inform the readers about the competitive forces in the fuel cell industry using Porter's Five Forces analytical model. Strengths and Weaknesses Academic researchers Gian, K.W, Alexander and Peter did not discuss strengths and weaknesses of Porter's Five Forces analytical method. Description Academic researchers Gian, K.W, Alexander and Peter used Porter's Five Forces analytical method to look at market direction and competitive market forces present in the fuel cell industry. At the time, this paper was written it was impossible to perform a complete and precise competition analysis for fuel cell technology because fuel cells were not available as an assembly line product for the vehicle market. Uses This paper demonstrates that Porter's Five Forces analytical method can be used to analyze the direction and competitive market forces influencing the fuel cell industry. Comparison Academic researchers Gian, K.W, Alexander and Peter used Porter's Five Forces analytical method to find market direction and competitive market forces of a non-commercially available product the fuel cell . This is different from the Yeo, J., & Huang, W. (2003). (Mobile ECommerce Outlook. International Journal of Information Technology & Decision Making, 2(2), 313. Retrieved from Academic Search Complete database.) Paper where Porter's Five Forces is used to find the competitive forces of an existing E-commerce market place. Most Informative I found the following points most informative in the article. Porter's Five Forces analytical method was modified for the fuel cell industry by adding three additional forces, infrastructure and fuel, government policy and investments. The fuel cell industry requires a new fuel i.e. hydrogen and fuel distribution network different from the existing gasoline distribution network. Clear government policies are needed for successful market penetration of fuel cell technology. Lastly considerable financial investment is needed for the adoption of this early phase of R&D 30 Fuel cell is unproven technology hence it has strong competition from substitute technology like natural gas, gasoline and gasoline-electric hybrid technologies. Market penetration of fuel cell technology is heavily dependent on government incentives and subsidies. This means new technologies, which do not have government backing, might have a very tough time penetration a market with deeply entrenched incumbents like the U.S. oil industry. It will be a new paradigm where auto manufacturers are the suppliers of both the vehicle and the fuel. Unlike the existing paradigm where the auto manufacturers are only manufacturing the vehicle and the oil is which is essential for the vehicle is supplied by a powerful supplier. Source Author Academic researchers Gian, K.W, Alexander and Peter have performed detailed research on the fuel cell industry. Gian and K.W Alexander work for Institute for Transport Planning and Systems (IVT) is part of the Swiss Federal Institute of Technology (ETHZ) in Zurich Switzerland. Moreover, Peter works for Paul Scherrer Institute, PSI, is the largest research center for natural and engineering sciences within Switzerland. Source Reliability The source rated to have high credibility according to Dax Norman trust scale. Sources Cited Ahlvik, P. and Brandberg, Å. (2001) Well-to-Wheel Efficiency—For Alternative Fuels from Natural Gas or Biomass (Borlänge: Swedish National Road Administration). Anon. (2003a) Nuvera demos 5 kWe module, Fiat car, Fuel Cells Bulletin, 12, p. 7. Anon. (2003b) Ballard launches stationary fuel cell generator for telecoms and UPS markets, Fuel Cells Bulletin, 10, p. 4. Anon. (2003c) UTC Fuel Cells, Nissan to collaborate on PEMFCs, Fuel Cells Bulletin, 4, pg 8. Anon. (2004) Quantum wins new automotive customer, 700 bar hydrogen storage order, Fuel Cells Bulletin, 9, p. 6. Arthur D. Little (2000) Cost Analysis of Fuel Cell System for Transportation, Baseline System Cost Estimate (Cambridge, MA: Arthur D. Little). Ballard Power (2004) Ballard Powers first Ford production fuel cell-powered focus. Available at: http://www.ballard.com/be_informed/media_resources/news/2004/09/28/jchuter29_0409280945-993). 31 Blessing, R. and Schick, H. P. (2003) 7. Berichterstattung im Rahmen der Energieverordnung über die Absenkung des spezifischen Treibstoff-Normverbrauchs von Personenwagen 2002 (Bern: auto-schweiz, Vereinigung Schweizer Automobil-Importeure). Bossel, U., Eliasson, B. and Taylor, G. (2005) The Future of the Hydrogen Economy: Bright or Bleak? (Luzern: European Fuel Cell Forum). California Air Resource Board (2004) California certified vehicles. Available at: http:// www.arb.ca.gov/msprog/ccvl/2004ccvl.htm. Carle, G. (2002) Brennstoffzellen für den Automobilbau im Wettbewerb, Diplomarbeit NDS ‘Betriebswirtschaft und Management für Ingenieure’, Zürcher Hochschule Winterthur (Winterthur: IVT, ETH Zurich). Carle, G. (2004) Erdgasfahrzeuge im Wettbewerb, Arbeitsbericht Verkehrs- und Raumplanung (Winterthur: IVT, ETH Zurich). Choudhury, R., Wurster, R., Schindler, J., Miller, M., Brinkmann, N., Armstrong, A., Rickeard, D., Jersey, G., Kerby, M. C., Kheshgi, H., Robbins, J., Cadu, J. and Le Breton, D. (2002) Well-to-Wheel Analysis of Energy Use and Greenhouse Gas Emissions of Advanced Fuel/Vehicle Systems—A European Study (Ottobrunn: L-B-Systemtechnik GmbH). Cleaner Drive (2003) Wie sauber fährt Dein Auto. Available at: http://www.cleanerdrive.ch/tools/news.cfm?lang=de. 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(2000) On the Road in 2020: A Life-Cycle Analysis of New Automobile Technologies (Boston, MA: Laboratory for Energy and the Environment, MIT). Wengel, J. and Schirrmeister, E. (2001) Innovationsprozess vom Verbrennungsmotor zur Brennstoffzelle, Chancen und Risiken für die badenwürttembergische Industrie (Karlsruhe: Frauenhofer Institut für Systemtechnik und Innovationsforschung). Wokaun, A., Baltensperger, U., Boulouchos, K., Gassmann, F., Hoffelner, W., Jansohn, P., Palumbo, R., Scherer, G., Steinfeld, A. and Stucki, S. (2004) The Role of Hydrogen in a Future Sustainable Energy System, Executive Summary of a Seminar Series Held at PSI During the First Semester 2004 (Villigen: Paul Scherrer Institut). Wokaun, A. and Brändli, H. (2001) Role of Innovative Car Technology for Promoting Sustainable Mobility (Zurich: ETH). World Business Council for Sustainable Development (2001) Sustainable Mobility Project, Dedicated To Make a Difference (Manila: WBCSD). Critique Author Fuad Khan fuadkhan@yahoo.com Mercyhurst College Erie PA Advanced Analytic Techniques Course 02/04/2011 Link to my wiki: http://intel520.wikispaces.com/ 36 A Manager's Guide for Evaluating Competitive Analysis Techniques Prescott, J. E., & Grant, J. H. (1988). A Manager's Guide for Evaluating Competitive Analysis Techniques. Interfaces, 18(3), 10-22. Retrieved from EBSCOhost. Name of Analytic Technique Porter's Five Forces Purpose The purpose of the paper is to inform busy analysts about strengths and weaknesses of 21 competitive analytical Porter’s Five Forces analytical techniques along a set of 11 dimensions. Strengths and Weaknesses of Porter's Five Forces Strengths: 1. Structured approach to examining industries 2. Identifies competitors 3. Basis for other in-depth analysis Weaknesses: 1. Basic assumption that economic structure of the industry is the root of competition 2. Helps drawing industry boundaries. 3. Long time needed to execute this analytical technique. Execute phase involves collection of data, analysis and dissemination of the findings to the appropriate individuals. 4. Cost to implement Porter's Five Forces analytical method is starting from $10,000 to $50,000, which is expensive for small companies Description of Porter's Five Forces Analytical Method Academic researchers John E. Prescott and John H. Grant present systematically how to use Porter's Five Forces Analytical method. Time to implement Porter's Five Forces analytical method can be divided into two states. Development i.e. specifying objectives of what we want to measure and any other constraints. Secondly execution phase which involves collection of data, analysis of data and dissemination of data. Data collection for Porter's Five Forces analytical method is performed using one or all three methods i.e. case study, personal interviews and literature search. Data for Porter' Five Forces is off the shelf, but needs further analysis by analysts to make sense of the data. Data for Porter's Five Forces is used to address current and future needs. Accuracy of Porter's Five Forces is dependent upon the technical, interpersonal conceptual, diagnostic and analytic skills of the analyst. Analyst will have to frequently update and challenge new data in the Porter's Five Forces model as competitive forces change in the industry. 37 Uses Porter's Five Forces analytical method is a structured approach to examining competitive forces in industries, identifying competitors in a particular industry. The method can be used as basis for more in-depth analysis by the strategy analyst. Data collection for the Porter's Five Forces is performed via research, personal interviews and case study. It takes a long time to execute Porter's Five Forces analytical method. Comparison Prescott and Grant’s paper (Prescott, J. E., & Grant, J. H. (1988). A Manager's Guide for Evaluating Competitive Analysis Techniques. Interfaces, 18(3), 10-22. Retrieved from EBSCOhost.) Provides a comparison of Porter's Five Forces against 20 analytical techniques. Prescott and Grant's paper provides a measurement of Porter's Five Forces analytical techniques, whereas Carle, Axhausen, Wokaum's (Carle, G., Axhausen, K. W., Wokaun, A., & Keller, P. (2005). Opportunities and Risks during the Introduction of Fuel Cell Cars. Transport Reviews, 25(6), 739-760) paper depicts how Porter's Five Forces is used to research the competitive market forces in fuel cell industry. Most Informative The following two items in this paper were most informative. Sources of data for implementing Porter's Five Forces analytical method is via case study, personal interviews and literature search. Time taken for data collection, analysis and dissemination of information. Source Author Academic researchers John E. Prescott and John H. Grant are affiliated with Joseph M.Katz Graduate School of business University of Pittsburg. Both the academic researchers have published this paper in a peer reviewed journal Strategic management. The paper was also refereed. Source Reliability The source is rated to have high credibility according to Dax Norman trust scale. Sources Cited Ball Richard 1987, "Assessing your competitor's people and organization," Long Range Planning, Vol. 20, No. 2, pp. 32-41. Bonoma, Thomas V and Shapiro, Bensen P. 1983, Segmenting the Industrial Market, Lexington Books, Lexington, Massachusetts. Desta, Asayehgn 1985, "Assessing political risk in less developed countries," Journal of Business Strategy, Vol. 5, No. 4, pp. 40 53. 38 Freeman, R. Edward 1984, Strategic Management:A Stakeholder Approach, Pitman Publishing Company, Boston, Massachusetts. Fruhan, William E., Jr. 1979, Financial Strategy: Studies in the Creation, Transfer and Destruction of Shareholder Value, Richard D. Irwin, Homewood, Illinois. Grant, John H. and King, William R. 1982, The Logic of Strategic Planning, Little, Brown and Company, Boston, Massachusetts. Hall, Graham and Howell, Sydney 1985, "The experience curve from the economist's perspective," Strategic Management Journal, Vol. 6, No. 2, pp. 197212. Hayes, Robert H. and Wheelwright, Steven C. 1979a, "The dynamics of process-product life cycles," Harvard Business Review, Vol. 57, No. 2 (March-April), pp. 127-136. Hayes, Robert H. and Wheelwright, Steven C. 1979b, "Link manufacturing process and product life cycles," Harvard Business Review, Vol. 57, No. 1 (January-February), pp. 133-140. Hax, Amoldo C. and Majluf, Nicolas S. 1984, Strategic Management: An Integrative Perspective, Prentice-Hall, Englewood Cliffs, New Jersey. Hofer, Charles W. and Haller, Terry 1980, "Globescan: A way to better international risk assessment," Journal of Business Strategy, Vol. 1, No. 2, pp. 41-55. 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Pekar, Peter P 1982, "The strategic environmental matrix: A concept on trial," Planning Review, Vol. 10, No. 5, pp. 28-30. 39 Petrov, Boris 1982, "The advent of the technology portfolio," The Journal of Business Strategy, Vol. 3, No. 2, pp. 70-75. Porter, Michael E. 1980, Competitive Strategy, The Free Press, New York. Porter, Michael E. 1985, Competitive Advantage: Creating and Sustaining Superior Performance, The Free Press, New York. Prescott, John E. 1987, "A process for applying analytic models in competitive analysis," in Strategic Planning and Management Handbook, eds. David 1. Cleland and William R. King, Van Nostrand Reinhold Company, Stroudsburg, Pennsylvania, pp. 222-251. Ramanujam, Vasudevan and Venkatraman, N. 1984, "An inventory and critique of strategy research using the PIMS data base," Academy of Management Review, Vol. 9, No. 1, pp. 138151. Reimann, B. C. 1986, "Strategy valuation in portfolio planning: Combining Q and VROI ratios," Planning Review, Vol. 14, No. 1,pp. 18-23, 42-45. Rockart, John F. 1979, "Chief executives define their own data needs," Harvard Business Review, Vol. 5, No. 2 (March-April), pp. 81-92. Rowe, Alan J.; Mason, Richard O.; and Dickel, Karl E. 1985, Strategic Management and Business Policy, second edition, Addison-Wesley Publishing Company, Reading, Massachusetts. Schoeffler, Sidney; Buzzell, Robert D.; and Heany, Donald F. 1974, "Impact of strategic planning on profit performance," Harvard Business Review, Vol. 52, No. 2, pp. 137-145. Stevenson, Howard H. 1976, "Defining corporate strengths and weaknesses," Sloan Management Review, Vol. 17, No. 3 (Spring), pp. 51-68. Stevenson, Howard H. 1985, "Resource assessment: Identifying corporate strengths and weaknesses," in Handbook of Business Strategy, ed. William D. Guth, Warren, Gorham and Lamont, Boston, Massachusetts, Chapter 5, pp. 1-30. Wack, Pierre 1985a, "Scenarios: Shooting the rapids," Harvard Business Review, Vol. 63, No. 6, pp. 139-150. Wack, Pierre 1985b, "Scenarios: Uncharted waters ahead," Harvard Business Review, Vol. 63, No. 5, pp. 73-89. Wagner, Harvey M. 1984, "Profit wonders, investment blunders," Harvard Business Review, Vol. 62, No. 5, pp. 121-135. 40 Washington Researchers 1983, Company Information: A Model Investigation, Washington Researchers Ltd., Washington, DC. Critique Author Fuad Khan fuadkhan@yahoo.com Mercyhurst College Erie PA Advanced Analytic Techniques Course 01/22/2011 Link to my wiki: http://intel520.wikispaces.com/ 41 Annex 2: Analytic Question Data Analytic Question: Is company TNISO in a position to win contracts for Open Source Intelligence services focusing on the Middle East and South East Asia with U.S. Central Command? Data Bargaining power of Data Date (when it Source Name Estimated Reliability of Other happened) or Location Data/Source Comments 01/12/2010 http://www.acq.o High Credibility This source the buyer, i.e. U.S. sd.mil/dpap/pdi/ provides CENTCOM is very eb/index.html contractual high. Buyer has requirements strict laws for every of U.S. facet of the buying CENTCOM process. contracts. Website is used to research U.S. CENTCOM buyer influence. Threat of substitute 04/11/2010 https://www.fbo. High Credibility This source services is low as gov/index?s=ag provides a only qualified ency&mode=for single point-of- companies with m&id=471ffe0b2 entry for U.S. strict guidelines can 854cc0ffba7b5ef government provide analytical f3df3916&tab=n procurement support to the buyer otices&tabmode opportunities i.e. U.S. CENTCOM =list&subtab=list over $25,000. &subtabmode=li Registered st&pp=30 companies can research if U.S. CENTCOM is procuring substitute services. Rivalry amongst existing competitors 04/13/2010 www.4centurion. com High Credibility This source provides key is high. There are competitor few incumbent intelligence for competitors like U.S. Booz Allen, CENTCOM 42 SAIC,CSC, SRA market place. providing analytical support to U.S. CENTCOM Threat of new 05/4/2010 entrants is high. www.epipeline.c High Credibility om This source provides Firms providing unique market analytical support to intelligence to U.S. CENTCOM do identify new not need large entrants in the amount of capital or U.S. market influence to CENTCOM provide analytical market space. support to U.S. CENTCOM and become a new entrant in the market place. Bargaining power of 04/01/2010 http://www.intelli Medium Credibility This source suppliers is low. gencecareers.co provides Companies are m/ research able attract information for qualified recruitment intelligence trends of analysts from the intelligence labor market. analysts in U.S. CENTCOM market place. Estimated reliability has been calculated by using Dax Norman trust scale located at http://daxrnorman.googlepages.com/WebSitesYouCanTrust-Oct08.pdf © Dax R. Norman, 2001. Unlimited personal or education use authorized with this statement. The scale for Dax Norman trust scale is shown below; 46.75= Very High Credibility 40.00= High Credibility 35.06= Medium Credibility 21.00= Low Credibility 7.46= Not Credible 43