porter s industry task environment analysis

You must include a cover page with the name of the industry on which your analysis is based. This paper does not require an abstract, executive summary or an introduction but does require a conclusion that explains, in one or two sentences why you think that this industry presents, or does not present, an attractive opportunity for new business ventures. You will therefore use Porter’s High, Medium and Low characterizations in your Porte’s forces paper

ANALYSIS

The industry to be analyzed must correspond to one of the following industry categories but under no circumstances are you permitted to do this exercise on the industry of which the company in your group case is a part. INDUSTRY EXAMPLES ONLY: COMPANIES IN GIVEN INDUSTRIES ➢ Leisure-cruise industry ➢ Carnival plc, Royal Caribbean, Norwegian cruise lines ➢ Internet sales industry ➢ Amazon, E-Bay, Priceline, Angie’s list, Alibaba ➢ Consumer technology industry ➢ Apple Inc, Hewlett Packard, Dell, Samsung ➢ Automobile manufacturing industry ➢ GM, Toyota, Ford, Nissan, Fiat-Chrysler, BMW

Analyze your industry using Porter’s six forces.

The paper should be structured using each of the six forces as a title Rate each of the forces as high, medium or low and explain the reason you think so. Do not quantify the ratings.

Use section headings for each of the forces and show the ratings within these headings and rely on the terminology and concepts in the text bullet points, relevant to your industry to justify each rating.

Back up your rate with industry research. Build on the evidence and eliminate unfounded speculation and opinion. The textbook offers some useful suggestions under industry information starting at the bottom of page 343. Your work is expected to be analytical, not merely descriptive.

Be concise and get to the point. Do not pad or be so brief as to make the work unintelligible.

Use the Porter’s forces blank grading sheet (course information handout number 5.1) to guide you.

This is not a report on an individual company but must reflect an industry as a whole. Use a variety of companies by way of example only. Focusing on a single company is a significant error.


DEVELOPING YOUR PAPER

Michael Porter and the Task Environment

In 1979 Michael Porter, then an assistant professor at Harvard, proposed that we look at the external

environment from an industry as well as company (PEST or STEEP) perspective. His Task Environment is

now routinely incorporated in strategic audits and has become known as Porter’s Forces. Dr. Porter initially

proposed five forces: Power of Buyers (customers), Power of Suppliers, Threat of New Entrants, Threat

of Substitute Products and Rivalry (existing competitors). After publication, his thesis was criticized for

failing to take account of the numerous other stakeholders and our textbook therefore includes a sixth force,

Relative Power of other Stakeholders. In a 2011 paper published in Harvard Business Review, Porter

himself continues to object to the inclusion of the sixth force, preferring to characterize it as complimentors.

He nevertheless provided us with a method for assessing the impact of these “other stakeholders” in the

form of a Stakeholder Priority Matrix (Fig 8-2, p233). Despite attempts that have been made to inject

numeric measurements, the elegance of Porter’s method is found in the use of High, Medium and Low to

assess the strength of the various forces. Using a grid, such as that in table 4-5 on page 121, multiplying a

weight by a rating to provide a weighted score proved to be prone to considerable error. You will therefore

use Porter’s High, Medium and Low characterizations in your Porte’s forces paper. The concept for

each of the forces is well explained in the textbook and you should carefully read from the middle of page

104 to the top of page 108. I will therefore focus on just a few points that often generate confusion and await

your discussion board comments and questions.

ASSESSING THE SIX FORCES

Power of the Buyer: Consider the buyer as the ultimate consumer. In the Hershey sample case, for example, the buyer is not the distributor or the retailer. Use whichever text bullet points seem relevant.

Power of the Supplier: This sometimes becomes complex since various classes of suppliers have very different levels of power. In the case of the cruise industry for example suppliers of food, alcohol, furniture, cleaning supplies, entertainment etc., the companies within the industry have significant choice and there is fierce competition among suppliers for their business. On the other hand when we consider fuel and shipbuilders, the picture is quite different. You are therefore free to explain this and to characterize the power as Medium High or deal with the two categories of suppliers separately.

Threat of New Entrants: Confusion here stems from the word NEW and you must be careful to distinguish this from Rivalry which is EXISTING competitors. Here you must look at the barriers to entry. High barriers mean a low threat and vice versa. The text bullet points provide a guide to assessment. In the auto industry for example, Chinese cars therefore constitute a threat of new entrants, whereas Japanese autos are existing competitors.

Threat of Substitute Products: A substitute is a product that performs the same task or provides an equivalent or substitute, but not identical, service. For example, the commercial airline industry defines its product as transportation and high speed rail already constitutes such a threat in Europe, and Japan and the US may eventually follow suit.

Rivalry: In this force it is easy to slip into the mode of a company rather than an industry analysis. The number of competing firms within a given industry is particularly important since rivalry in a consolidated industry tends to be higher than it is in one that is fragmented. The consumer technology industry for example. Young industries such as consumer technology may however not present as clear a picture. Rivalry tends to be high in newer sectors such as smart-phones as well as in more consolidated segments such as traditional computers

Relative Power of Other Stakeholders: Although this is tricky because stakeholder power tends to shift rapidly and therefore requires some research, certain constants may be identified. Government regulators, for example, play a very large role in the airline and auto industries and a lesser but still important one in the cruise and consumer technology industries. Union influence is another important variable. Complimentors such as dealerships in the auto industry, airport services in commercial airlines, travel agents in the cruise industry and retailers in consumer technology must also be considered. • Conclusion. In one or two sentences, explain why you think that this industry presents, or does not present, an attractive opportunity for new business ventures.

SOURCE NOTES

As with all assignments, you must include an APA or MLA formatted, source note appendix.

URLs alone do not suffice. Provide a date, site name, title and author where available.

Wikipedia, Investopdia and other “wiki” or similar open sites are not peer reviewed and are therefore

academically unacceptable.

Always correctly attribute sources of any data or information. If you use someone’s ideas, words or phrases,

including the textbook you must list the sources on the works cited page as well as in text citations such as

“quotation marks” and/or superscript numbers(1) and/or (brackets).

FORMAT

You must include a cover page with the name of the industry on which your analysis is based, the date

submitted, your name, Z number as well as the course name and number and your instructor’s name.

The length guideline is four to five pages, not including the cover page and the endnotes.

Use a 12-point font, 1.5 line spaces and a clearly legible typestyle such as Times New Roman or Ariel

Proof read your paper. Grammatical and spelling errors will lower your grade.

Be sure to number the pages and staple your paper.

This paper does not require an abstract, executive summary or an introduction but does require a

conclusion that explains, in one or two sentences why you think that this industry presents, or

does not present, an attractive opportunity for new business ventures.