Tuesday, March 18, 2008

An Interview with Michael E. Porter- Harvard Business School

Assessing Industry Attractiveness: Porter's 5 Forces

Porter’s five forces model is a great tool to determine industry attractiveness. The use of this model makes companies to step back, and see what is important. By stepping back and using the five forces, a company can get a broader view about what is significant to know on the industry they are in. The main thing in the five forces is to know where the power lies in the industry. This tool will become more effective by help knowing the strength of the competitors, and the strength of the position in which the company would like to move to. This tool can also help to take advantage in some situations, and improve weakness in others. The effectiveness of the five forces is not only on how to drive the company, but it also uses strategic planning for future products, and new rivals which is very important component in the market’s competition.

The Soft Drinks Industry Attractiveness- Porter’s Five Forces

Threats of entry posed by new or potential competitors:
Pepsi, and Coca Cola are controlling the industry, and the entry is difficult for reasons of the size and strong brand identity that this two main players have in the market. Bottling will be another barrier to entry since it requires capital investment, which might prevent entry.
Attractiveness level-Low

Rivalry among existing firms:
Pepsi and Coca Cola are controlling more than 70% of the industry in the U.S, and the top six controls about 90% of the market. Therefore the rivalry is less than if there were many small or equal size players in the market. Pepsi and Coke focusing more on rivalry in advertising, promotion and new products, rather than price since their buyers are characterize as brand loyal.
Attractiveness level- Medium
Bargaining power of suppliers:
Suppliers have little power over the industry, since the input of the biggest players in the market is primarily sugar, cans, and bottles. Sugar can be purchase easily in the market, and some times when sugar price is increase a sweet corn can be a cheap substitute. Aluminum is inexpensive material, and there are many suppliers that compete for a contract, therefore can dealers also have little supplier bargaining power.
Attractiveness level-LOW
Bargaining power of buyers:
In this industry consumers are brand- loyal, and in most cases they don’t base their purchase choice on price. Moreover, the stores see the soft drink industry as one that generates consumer traffic to the store, and therefore they find themselves obligate to hold variety of products from both Pepsi and Coke. The leading power buyer of this industry among all is the fast food network which buys in very low prices from Pepsi and Coke. By doing so Pepsi and Coke are trying to build brand recognition and loyalty, and use this avenue as an important channel to the customers through the fast food chains.
Attractiveness level-Low/ Medium
Closeness of substitute products:
Soft Drinks are unique and other drinks such as water and juices do not have the same taste, but they do have in common similar refreshing qualities that might make them a suitable substitute. Hot drinks and alcohol can’t be a substitute to soft drinks since they are not desirable or proper to the time when soft drink is needed.
Attractiveness level-Low/ Medium


By using the five forces analysis I will recap and say that the soft drink industry is profitable for the exiting firms. New firms will find it hard and in most times unprofitable market to go in.

Saturday, March 8, 2008

Mission Statement by Microsoft- Youtube video

PRET A MANGER- Mission Statement

Prêt a Manger mission statement can be found on every shop window. As a constant customer in this healthy food shop’s chain, I find their mission statement well based. Prêt a Manger is a private company that has shops in the U.S, U.K, and Hong Kong, which specializes in fresh and healthy food. The company mission statement emphasizes several points that make it a sound mission statement. First of all it is targeted to its customers. It captures the company’s unique and enduring reason for being, and it show the direction in which the company is about. I also find their policy and commitment to the customers in this mission statement which refers to the values of the company for natural and fresh food every day, which show how dedicative the company to it mission. The length of this mission statement is long enough to reach its targeted customers, which is also important when writing a mission statement. More than just the length and the content of Prêt a Manger’s mission statement, I love the idea that it can be found in every shop. The fact that the mission statement is open to the public effects the employees to strive for perfection and it is a reminder to the customer that Prêt a Manger is “passionate about food”.

Thursday, March 6, 2008

Mission Statement- Part 1

Since mission statement is a stepping stone in the strategic planning process, it is important to implement a mission statement that will apply to the organization's strategies. Different companies have different missions, and in order to distinguish themselves, they should write a better mission statement. So what really makes a mission statement better than others? A good mission statement should capture an organization's unique and enduring reason for being, and boost stakeholders to pursue common goals. Since this is a general statement I will clarify how to do so. A mission statement should be the guiding light of organizations, not only slogans, but it should articulate its ambitions, behavior, culture, and strategies. It gives everyone the chance to know what the company is about. A well developed mission statement offers some possible benefits such as direction, policy, meaning, and challenge; Direction will focus on what the organization does, and what it aims to be successful in; policy will be the organization values, and a principle of what is acceptable and what is not; Meaning is the organizations strive to accomplish, and why they wish to do so; Challenge will set up the goals, and will be a tool to measure the achievement of the organization as a whole.
In order to evaluate some criterions for a mission statement, the organization should know who the target audience is. What I mentioned above won't be effective if the mission statement will be targeting to the wrong audience. Therefore it needs to be established to whom the mission statement will be directed to. Another criterion will be the length and the language used in the mission statement. Some organizations use only a single sentence, while others use long mission statements including visions, philosophies, plans, and strategies. The mission should be long enough to reach its targeted audience. Language- A great mission statement may not be taken seriously if the language is too florid, and/ or cumbersome. A well written mission statement should encourage commitment and energize the entire organization toward fulfilling the mission. Lastly, the element of uniqueness is also important; organization mission statement should be unique to the organization.