Posts Tagged ‘Porter’
People say organizations should have Mission statement, Vision Statement, etc. I say everything boils down to only one word – Purpose.
To better understand these things, I took a small example of a person who wants to shift his career from IT to Marketing. Let us see these things from his perspective:
MISSION – Why does the student wants to go from IT into Marketing?
VISION – What does he want to become in Marketing?
STRATEGY – How does he want to become what he wants to become in Marketing?
STRATEGIC OBJECTIVES – How does he break his strategy into different objectives?
SUCCESS/FAILURE INDICATORS – How does he know whether he succeeded or not? What are the performance indicators?
This sort of strategic thinking is the same even for an organization or an individual. Of course, with changing situations, environment, operational, financial, competitive, etc. you actually change your strategies. So, strategy is all about Purpose and Future Thinking.
It is about where are you now, where do you want to go and why, and how do you want to go and why?
Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.
The five forces of competition according to Porter are:
- Threat of substitutes
- Supplier power
- Buyer Power
- Barriers to entry
Porter has contributed the value-chain analysis model, which is:
Value Chain Analysis helps you identify ways you can create the best value for your customers. Value Chain Analysis is a three step process:
1. Activity Analysis – identify all the activities involved to deliver your product or service.
2. Value Analysis – identify what to be done for each of the activity to add the greatest value to your customer.
3. Evaluating and Planning – Evaluate if it is worth implementing it and then plan for action.
Porter has contributed immensely to marketing and strategy. Someof his major contributions are:
- Five Force framework
- Diamond Model
- Value Chain Analysis
Although there are some critics like the Blue Ocean Strategy, Porter is regarded as one of the best management thinkers in the world.