A critical assessment of marketing analysis tools Essay

A critical assessment of marketing analysis tools - Essay Example The intention is to evaluate, develop as well as disseminate the competitive advantages for an organization. In the current study two competitive strategies have been critically evaluated. Porter’s five forces model The configuration of porter’s five forces differs from industry to industry. In commercial aircraft market, rivalry is strong among dominant producers Boeing and Airbus as bargaining power is strong, while threat of substitutes and threat of entry and supplier power is less. In sector of Movie Theatre, substitute entertainments forms are proliferated as power of distributors as well as dominant movie producers are important. The competitive force which is strongest determines industry profitability and becomes crucial for strategy formulation (Porter, 2004) Economy has become more dynamic as well as volatile, and strategies require moving beyond conventional ideas of positioning and competition while understanding profitability and industry competition (Port er, 1980; Hubbard and Beamish, 2011). In order to describe the five basic forces of competition, economist and professor, Micheal E. Porter created a model which can be considered by companies while developing and implementing business strategies (Porter 2008). The various forces constituting micro level external environment were supplier power, threat of new entry, customers or buyer power, substitute power as well as competitive rivalry (Grant, 2011). The overall configuration and strength of the above forces differ by sector, and these forces determine overall potential for profitability and attractiveness. With the decrease in the intensity, attractiveness and productivity of the industry becomes higher. The goal of business managers is to determine and evaluate the factors, drivers or sources which influence these forces so that they can be shaped to favour the strategy implementation process. New entrants introduce themselves in the market with new capacities. They are interes ted in gaining share in the market and pressurise the pricing strategy and tend to shake the established restructuring as well as industry competition. The influence of these threats depends on how strong is the industry barrier, strategic decisions influencing the industry and overall incumbent reaction (Bain, 2001). Other factors which influence these treats include product differences, economies, switching costs of buyer, brand identity, ease of distribution, capital requirements, government policy, expected retaliation as well as cost advantage. The height of entry barriers has been constantly proven as one of the most critical predicator to overall industry profitability (Frank, 2008). Suppliers have the bargaining power to control and limit profitability of the industry by increasing prices or reducing the services or product qualities. Thus, industry participants find it difficult to achieve profit from increased costs. Various factors influence the supplier power. these can be supplier input differentiation, concentration of supplier in the industry, selling volume of supplier products and its relative importance, information available about supplier products, profitability of the suppliers as well as presence of supplier substitutes. Other factors include forward integration of important suppliers, costs to suppliers relative to overall purchases as well as supplier incentives. Customer or buyers also exert some power in the market. They have the power of bringing down prices of products or services. They can look for better quality as well as intensify internal competition among brands. All of these can result in decrease in the supplier as well as industry profitability. factors which influence the power of buyers include importance of the volume of purchases,