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Coursework title: Individual Assignment

2. Subject Code: MBAPML201

3. Subject Name: Strategic Management

4. Academic Year: 2018 June Start

5. Student First Name: VINOD

6. Student Last Name: KUMAR JAKHAR

7. Student ID No.: 180755118265

8. Student’s personal Email ID: vinod4dubai@gmail.com

1. Explain Porter's Five Forces Model of Competition.?

Porter's Five Forces of Competitive Position Analysis based on the concept that there are five forces that

determine the competitive intensity and attractiveness of a market. Porter’s five forces help to identify

where power lies in a business situation.

Strategic analysts often use Porter’s five forces to understand whether new products or services are

potentially profitable. By understanding where power lies, the theory can also be used to identify areas of

strength, to improve weaknesses and to avoid mistakes.

Porter’s five forces of competitive position analysis:

 The five forces are:

1. Risk of entry by potential competitors: Potential competitors refer to the firms which are not
currently competing in the industry but have the potential to do so if given a choice. Entry of new
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 players increases the industry capacity, begins a competition for market share and lowers the
current costs. The threat of entry by potential competitors is partially a function of extent of
barriers to entry. The various barriers to entry are-
 Economies of scale
 Brand loyalty
 Government Regulation
 Customer Switching Costs
 Absolute Cost Advantage
 Ease in distribution
 Strong Capital base
2. Rivalry among current competitors: Rivalry refers to the competitive struggle for market share
between firms in an industry. Extreme rivalry among established firms poses a strong threat to
profitability. The strength of rivalry among established firms within an industry is a function of
following factors:
 Extent of exit barriers
 Amount of fixed cost
 Competitive structure of industry
 Presence of global customers
 Absence of switching costs
 Growth Rate of industry
 Demand conditions
3. Bargaining Power of Buyers: Buyers refer to the customers who finally consume the product or
the firms who distribute the industry’s product to the final consumers. Bargaining power of buyers
refer to the potential of buyers to bargain down the prices charged by the firms in the industry or
to increase the firms cost in the industry by demanding better quality and service of product.
Strong buyers can extract profits out of an industry by lowering the prices and increasing the
costs. They purchase in large quantities. They have full information about the product and the
market. They emphasize upon quality products. They pose credible threat of backward
integration. In this way, they are regarded as a threat.
4. Bargaining Power of Suppliers: Suppliers refer to the firms that provide inputs to the industry.
Bargaining power of the suppliers refer to the potential of the suppliers to increase the prices of

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 inputs( labour, raw materials, services, etc) or the costs of industry in other ways. Strong suppliers
can extract profits out of an industry by increasing costs of firms in the industry. Suppliers
products have a few substitutes. Strong suppliers’ products are unique. They have high switching
cost. Their product is an important input to buyer’s product. They pose credible threat of forward
integration. Buyers are not significant to strong suppliers. In this way, they are regarded as a
threat.
5. Threat of Substitute products: Substitute products refer to the products having ability of satisfying
customers’ needs effectively. Substitutes pose a ceiling (upper limit) on the potential returns of an
industry by putting a setting a limit on the price that firms can charge for their product in an
industry. Lesser the number of close substitutes a product has, greater is the opportunity for the
firms in industry to raise their product prices and earn greater profits (other things being equal).

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2. Write an essay on Portfolio Analysis-purpose, techniques, advantages and
disadvantages.

PORTFOLIO ANALYSIS
Definition: Portfolio analysis in strategic management allows to answer key questions how to shape the
present and future business portfolio (of product or services) in order to reduce the risk of functioning in
a changing environment, and increase the effects of the implemented strategy.

PURPOSE OF PORTFOLIO ANALYSIS

1. The analysis is done in large multinationals with multiple product portfolios. A company should be
aware of the financial health of the portfolios and their wellbeing. To know the top performers
and strategies to maintain them the profit makers is the primary objective of Portfolio’s analysis.
2. No company will have all products in profit. There will be few products or product lines which may
be loss makers. These are the cash consuming portfolios and the company should be aware of
them so that they can either be discontinued or revamped. The idea is to make them less costly
and more profit making.
3. Portfolio’s analysis helps the company to stay in sync with the vision, mission, and objectives. At
times it may happen that a certain portfolio may be loss-making and the company may have been
unknowingly being financing the dead weight for a long time. In these cases, the analysis will give
a clear picture of the scenarios.

METHODS OF PORTFOLIO ANALYSIS

The most popular portfolio analysis models, both in marketing theory and practice, are the following:
1. BOSTON CONSULTING GROUP (BCG) MATRIX:
This growth-share model mainly concerns the generation and use of cash within a certain organization
and is considered to be the simplest and best-known model to analyze the strategic units within a certain
company. This model is focused on the market growth rate and the relative market share of different
business strategic units.
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 2. THE GENERAL ELECTRIC/ MCKINSEY MATRIX:
This model is focused on market attractiveness as well as the strength of the business. In a number of
ways it is an extension of the above Boston Consulting Group model, but uses a multi attribute approach,
rather than single dimensions.
3. THE SHELL DIRECTIONAL POLICY MATRIX:
This model is considered to be an improvement of the General Electric matrix, having as a starting point
some of the same features. This matrix is focused on the company’s competitive capabilities and
prospects for sector profitability. It is however based on a complex analytical process and therefore
criticized by some. Another weakness of this model is the fact that is assumes that the same set of factors
is applicable for any business.
4. ARTHUR D. LITTLE STRATEGIC CONDITION MATRIX:
This model introduces a sense of realism in the strategic planning process. It also introduces the industry
life cycle dimension but it also lacks a standardization of this life cycle.
5. PRODUCT LIFE-CYCLE:
Better known for predicting the sales patterns within a market, but also an effective portfolio tool that
allows business units to be matched against their current and future sales expectations – that is,
introduction, growth, maturity or decline.

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Advantages of Portfolio Analysis :
1. Determines the financial stability of the company along with product performance
2. Acts as trend analysis for the product to predict they are possible future in the market
3. Guide for investors and shareholders for financial assessment of the portfolios
4. The tool in decision making for the company to take product-related decisions whether to continue,
change or discontinue products.

Disadvantages of Portfolio Analysis :

1. Doesn’t consider market influencers and political factors in the analysis which may cause sudden
changes in the nature of the portfolio
2. It is difficult to perform Portfolio Analysis for a startup company or small-scale industries with limited
product lines
3. Any of the major portfolio analysis tools do not consider internal factors of the company like a sudden
change in management which may affect sales of the product.

3. Explain Blue Ocean Strategy- Meaning, Characteristics, Principles.

BLUE OCEAN STRATEGY

It is all about minimizing risks due to competition threat and maximizing opportunities by exploring new
boundaries. However, formulating and executing Blue Ocean Strategy have their own principles that
define and separate blue ocean strategy from competition-based strategic thought. Blue ocean strategy is
about gaps rowing demand.

A) Meaning: Blue ocean strategy means, the market where market boundaries and industry
structure can be reconstruct by the actions and beliefs of industry players. The structure and
market boundaries exist only in managers’ minds; practitioners who hold this view do not let
existing market structures limit their thinking. To them, extra demand is out there, largely
untapped.
B) Definition: Blue ocean strategy generally refers to the creation by a company of a new,
uncontested market space that makes competitors irrelevant and that creates new consumer
value often while decreasing cost”.

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CHARACTERISTICS OF BLUE OCEAN STRATEGY:

1) Non-Existent Industries:
In a Blue Ocean Strategy, one tends to see a creation of a whole new industry as you innovate and create
products and services that are highly unique and unseen. Blue Ocean Strategy denotes all the industries
not in existence till today.
2) Undefined Market Space:
The market space in blue ocean strategy is unknown as it has been uncontested and is to be created and
developed. The producer has a slight idea about its returns, but is completely oblivious of its potential,
scope, and span of coverage.
3) Undefined Industry Boundaries:
Again, even the Industries boundaries are undefined as these will be new industries and would mean that
the scope of the industries can be as large as one's imagination, creativity, and potential.
4) Unknown Competitive Rules:
The rules of the market are not defined, the policies governing the industries are not even developed, the
scope of the market, industry is just stipulated and the competition is almost negligible.
5) High Profit & Growth Opportunity:
Clearly when there is no risk of an immediate competitor on the product, the industry thus formed by the
producer is in every sense skewed and inclined towards the producer.
6) Value Innovation:

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Blue Ocean Strategy works on the principle of value innovation which means that it radically looks only
towards an innovative idea to create new or an improved product which is far better than its
counterparts.
7) Innovation & Creativity:
Innovation and Creativity are the essentials in this strategy as the producer's only aim is to develop an
innovative and an efficient product that either out performs existing products far behind technologically
or it is something never thought of and unheard to everybody.
8) Create a Market:
The benefit of going solo as an innovator is that you create the market for yourself, examining the need of
the customer and segmenting the consumer pool. You can also install utility of the product which makes it
equally possible to be consumed by another segment of the market.
6) Developing Future Demand:
When the first press conference was conducted by Steve Jobs for I Phone, he didn't show case his
product, but instead he built a relationship with the customers in his very presentation. He got their
attention and he immediately made a blow by tempting them to buy the product.
10) Focus on Creating Future Customers:
It's not just about creating customers, but instead building a pool of high loyal customers who would look
up to the brand as their own and idealize their every new product.

PRINCIPLES OF BLUE OCEAN STRATEGY:

1) Reconstruct Market Boundaries:
This principle identifies the paths by which managers can systematically create uncontested market space
across diverse industry domains, hence attenuating search risk.
2) Focus on the Big Picture, not the Numbers:
This principle, which addresses planning risk, presents an alternative to the existing strategic planning
process, which is often criticized as a number-crunching exercise that keeps companies locked into
making incremental improvements.
3) Reach beyond Existing Demand:
To create the greatest market of new demand, managers must challenge the conventional practice of
aiming for finer segmentation to better meet existing customer preferences, which often results
increasingly small target markets.
4) Get the Strategic Sequence Right:
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The fourth principle describes a sequence that companies should follow to ensure that the business
model they build will be able to produce and maintain profitable growth.
5) Overcome Key Organizational Hurdles:
Tipping point leadership shows managers how to mobilize an organization to overcome the key
organizational hurdles that block the implementation of a blue ocean strategy.
6) Build Execution into Strategy:
This principle introduces fair process to address the management risk associated with people’s attitudes
and behaviors. Because a blue ocean strategy represents a departure from the status quo, fair process is
required to facilitate both strategy making and execution by mobilizing people for the voluntary
cooperation needed for execution.

Reference’s:
 Strategic Planning (2nd ed.) by Stanley C harles Abraham
 C oncepts in Strategic Management and Business Policy: Globalization, Innovation and
Sustainability, by Thomas L. Wheelen, J . David Hunger, Alan N. Hoffman
 Strategic Management - Singhania University-MBA Text Book, E.2017,
 https://www.investopedia.com
 https://www.coursehero.com

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