Shaping Strategies

After reading the Harvard Business Review’s article, “How Competitive Forces Shape Strategy”, I think young business students and entrepreneurs will be more prepared for their futures. Michael Porter’s five forces teaches you to prepare for situations prior to them happening, and recognizes that there are ways to potentially predict the direction of an industry.

These competitive forces reveal the drivers in business industry competition.  For instance, a company strategist who understands that competition extends well beyond existing rivals will detect a wider range of competitive threats and be better prepared when it comes to addressing those threats.  Porter also says that an industry’s structure can be reshaped in two ways:  redividing profitability in favor of incumbents or by expanding the overall profit pool.  I believe that recognizing that companies and industries are constantly changing, and we also have the power to change those industries will lead towards new ways of competing and altering the five forces for the better.

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  In the HBR, Porter wrote, “Creative strategists may be able to spot an industry with a good future before this good future is reflected in the prices of acquisition candidates.”  When thinking creatively, I believe that is where companies or industries really allow themselves to see a change they do or do not want in their industry.  Greater creative also leads into greater competition.  The force that I believe will be most prominent in my industry is threat of new entrants.  I think that this force has the potential to bring in a lot of creative, and a lot of new ideas from outside sources that may not have been present otherwise.  In addition, bringing new entrants to an industry brings new capacity and a desire to gain market share that puts pressure on prices, costs, rates of investment, and ultimately, shakes up the competition.

My group’s project deals with designing a food app that gives you recipes for whatever you already have in your kitchen.  While we believe that our strategy, the advice from this article, and our own ambitions would make this app successful, going in, we have threats from outside competitors such as online recipe sites, and other similar apps. By having this knowledge of the five forces now, it will be easier for my group to be able to adapt to those current outside threats, as well as the ones that will come after it.

Overall, I learned that Porter’s five forces creates an interesting, yet very realistic outlook on how industries and businesses are shaped today, and the strategies young entrepreneurs need in order to make it in the real world.

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