Respond to the below post please list intext citations to support answers. Explain why you agree or
Question:
Respond to the below post please list intext citations to support answers. Explain why you agree or disagree. Then, share any example from your professional experience to support your assertions.
Michael E. Porter's research and teachings in strategy and industrial economics led to the development of the model of generic competitive strategies in 1980. Porter suggests that firms should follow his recommended strategies of differentiation, lower cost, and focus to remain competitive. By following the model, Porter believes that firms can achieve higher profitability compared to their competitors (Porter, 1998 and 2004).
In addition to the generic competitive strategies paradigm, it has been established that a firm's competitive environment has a common framework that consists of five competitive forces. These forces are considered determinants of an industry's overall competitiveness and financial gain. The determinants are identified as the threat of new entry, intensity of rivalry among existing firms, pressure from substitute products, and bargaining power of suppliers and buyers. The joint impact of these forces facilitates the intensity of competition within each industry, where the advantage of each competitive force is industry-specific. Profitability, which is regarded as the "rate of return on invested capital," has a negative relationship with the overall benefits of the forces. As a result, it has been revealed that the greater the effect of the five forces, the lower the predicted financial gain in an industry (Porter, 1980).
According to Porter, examining an industry using the five forces helps firms to identify their strengths and weaknesses relative to their competition. Porter argues that if firms are aware of the impact of each competitive force, they can take appropriate measures to position themselves favorably against the pressure exerted by the five forces (Porter, 1980).
Porter's generic competitive strategies model provides firms with a simplistic and structured model that informs them of how they stand out among competitors and where they still need to improve. Based on your understanding of the generic competitive strategies model, how do you think the model can be improved to further enhance a firm's performance?
Auditing Cases An Interactive Learning Approach
ISBN: 9780134421827
7th Edition
Authors: Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt