Competitive Forces Model and
Knowledge Management
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99223
chen@gonzaga.edu
Competitive Force Model
Entry barriers
Economies of scale
Proprietary product differences
Brand identity
Switching cost
Capital requirements
Access to distribution
Government policy
Expected retaliation
Suppliers
New entrants
Threat of
new entrants
Industry
competitors
Bargaining power
of buyers
Bargaining power
of suppliers
Determinants of supplier power
Importance of volume to supplier
Presence of substitute inputs
Switching cost ...
Determinants of substitution threat
Relative price/performance of substitutes
Switching cost…
Intensity
of rivalry
Rivalry Determinants
Industry growth
Brand identity
Switching cost….
Buyers
Determinants of buyer power
Bargaining Leverage Price Sensitivity
Buyer volume
Brand identity
Switching cost
Product differences
Buyer information Buyer profits ….
Threat of
substitutes
Substitutes
(Source: Porter, 1980)
FIVE COMPETITIVE FORCES
MODEL
NEW
MARKET
ENTRANTS
THE FIRM
SUPPLIERS
SUBSTITUTE
PRODUCTS
& SERVICES
Threats
TRADITIONAL
COMPETITORS
Bargaining power
CUSTOMERS
N
FIVE COMPETITIVE FORCES
MODEL
NEW
MARKET
ENTRANTS
Internal Forces
1.customer focus
2.communication
3.core compentencies
4.complexity
5.quality
SUPPLIERS
SUBSTITUTE
PRODUCTS
& SERVICES
Threats
THE FIRM
TRADITIONAL
COMPETITORS
Bargaining power
CUSTOMERS
N
Source: Knowledge: the key to organisational survival, Raeside and Walker, the TQM Magazine, 2001
Competitive Forces
• Knowledge management is the main
competitive force.
-- Quintas et al., 1997
Organizations should stratify the management
of customers based on principles of quality
(satisfaction), cost/profit, and future
profitability potential.
Source: Knowledge: the key to organisational survival, Raeside and Walker, the TQM Magazine, 2001, p.157
Competitive Forces (cont.)
• The success does not necessarily go to the
firms that know the most, but to the firms
that can make the best use of what they
know and know what is strategically most
important to the firm and to the society.
• Therefore, firms should become “learning
organizations” to maximize their knowledge
base.
Modified European Quality Model: e-Learning
Enablers
Results
People
People
Results
Policy &
Strategy
Customer
Results
Partnership
&
Communities
Society
Results
IT &
Resource
Content/
infrastructure
Innovation and Learning
Source: Knowledge: the key to organizational survival, Raeside and Walker, The TQM Magazine