The literature suggested that “Rapid changes in the external environment of organisations have been accompanied by calls for accountants to change the nature of information they provide, the skills they possess and the role they play in the organisation. The proposed changes, which are encapsulated under the phrase accounting for strategic positioning or strategic management accounting are two pronged. On one hand accountants are required to reposition themselves in the organisation hierarchy where they will be involved in the formulation, implementation and choice of strategies. Accountants are also being urged to adopt a range of techniques whose emphasis is futuristic and external to the firm especially emphasizing the importance of monitoring customers and competitors.” (Nyarnori, 2000). Based on my studies on the industry of stock brokerage, I agree with the statement that “The tools and techniques that were covered in the Strategic Cost Management and Strategic Business Analysis courses are very useful in providing decision oriented information to senior management in my organisation and such information will ultimately enhance its corporate value.” The essay (How Porter’s Five Forces Model shapes strategy for a new and small-size stockbroker) may be one of applications of those techniques learnt from the Strategic Cost Management and Strategic Business Analysis . 1. Introduction The industry of securities brokerage (or named stockbroker) may be divided into three categories: the multinational financial giants, the traditional adviser-based stockbrokers and the internet-based stockbrokers. The large-scale multinational financial giants are probably represented by the renowned investment banks such as Goldman Sachs, UBS, D... ... middle of paper ... ...back and learning, so that the strategy can be carried out on the whole organisation. 6. In Conclusion The technique of Porter’s Five Forces Model is discussed in this essay and in applied in the model for shaping strategy of a new and small-size firm in the stockbroker industry. The weakest point in the industry may be local adviser-based brokers and the needed-based positioning may be the suitable strategy for the firm to survive in the fierce competitive market. Even though a myriad of tools and techniques learnt in the Strategic Cost Management and Strategic Business Analysis courses are not fully exploited in this essay, it is generally recognised that those techniques are useful for a corporate to formulate strategy, do strategic planning, control costing and quality, as well as eventually elevate its values, regardless the nature and size of organizations.
Nucor Corporation was the largest manufacturer of steel and steel products in North America, with a production capacity of approximately 27 million tons. On an international scale, Nucor was ranked as the 14th-largest steel company in the world based on tons shipped in 2013. Amongst the five generic business strategies, Nucor is known as a low-cost producer, with a known competitive advantage of innovative steelmaking technology. The purpose of this paper is to perform a business analysis of Nucor Corporation by analyzing it using management tools such as SWOT, PESTEL, and Porter’s Five Forces (Thompson, Peteraf, Gamble, & Strickland III, 2014).
As strategy consultants of McCormick & Associates, we use Porters Five Forces Model as a framework when making a qualitative evaluation of a firm's strategic position (Appendix 1.2). These five forces determine the competitive intensity and therefore attractiveness of a market. These forces affect the ability of a company to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place.
The biggest challenge that Costco may face is that its main benefit, offering low-price items through bulk purchases, may no longer attract consumers as before. Furthermore, there are other substitutes to most of Costco’s goods, particularly food products and similar commodities that are easily accessible and can satisfy consumer’s expectations, thereby this is a threat that could be classified as high. Based on this threat of the Five Forces model, the external factors leading to a high threat must be considered one of the company’s most important challenges.
Dess, G. G., Lumpkin, G. T., Eisner, A. B., & McNamara, G. (2012). Strategic Management: Text & Cases (6th Ed.). New York, NY: McGraw-Hill.
Businesses reach a particular point in their operations when redeveloping their business model becomes essential for their continued success. A business model consists of four meshing elements, which work in harmony to create and provide value. The elements include customer value proposition, profit formula, key resources and essential processes (Johnson, Clayton and Kaggerman 60). The customer value proposition elements involve the companies coming up with a particular way of creating value for the customers by providing solutions to certain problems. The element is particularly evident when a company develops a new product of services to address some of the customer needs in a convenient or satisfactory manner.
While being employed in the retail industry for over three years I established a love for learning the different ends and outs to the industry. The industry is currently growing for the Follett Bookstore Company which was founded in 1873, in the state of Illinois. In most businesses I am positive that Porter’s five competitive forces has been use in more than one way.
According to Innes (1998), strategic management accounting is the provision of information to support the strategic decisions in organizations. On the other hand, the Chartered Institute of Management Accountants (CIMA) in the UK defines it as a form of management accounting in which emphasis is placed on information which relates to factors external to the firm, as well as non-financial information and internally generated information (CIMA Official Terminology, 2005:54).
This is a crucial part of a strategic analysis because ‘…organisations do not exist in a vacuum, they are part of a complex world’ (Bowman 1987:61) and many factors can influence operations, beneficially and unfavourably. However, these can be difficult to comprehend due to their complexity, diversity and fast changing nature. Necessarily a number of techniques have been developed to facilitate the process and to ‘…contribute to answering the key managerial question…’of what ‘…opportunities and threats might arise in the future’ (Johnson & Scholes 2002:99).
Analysing McDonalds (fast food outlets) using Porters 5 Forces model – sometimes called the Competitive Forces model.
Porter’s five forces is a framework for analyzing an industry and business strategy development. It looks at forces that determine the competitive intensity of an industry and hence the overall attractiveness of that industry. The configuration of the five forces differs by industry. Understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition over time.
In a world of free trade, growing competition and accessibility to foreign markets, the need for methodical market analysis and assumptions is steadily rising in today’s business environment. It is just a normal way of thinking to primarily intent to eliminate the financial before entering a new and foreign market. This suggests that enterprises have to develop an overall strategy for their business in order to gain competitive advantage and consequently market share. With the words of Michael E. Porter, professor at Harvard University and leading authority on competitive strategy, this desirable market success is indirectly linked to the individual structure of a market. The unique structure of a single market influences the strategic behaviour and the development of a competitive strategy within a firm. The competitive strategy finally decides whether a company performs successfully on the market or not. Referring to this interpretation of business success, M. E. Porter established his five forces framework that enables directives to gather useful information about the business environment and the competitive forces in industries.
Goldman Sachs is one of the oldest and largest financial intermediaries and brokerage firms in the United States. Goldman Sachs began in 1869 as the sole enterprise of Bavarian immigrant Marcus Goldman who would buy promissory notes from New York City merchants at a discount, giving them the cash needed to operate their businesses, and then sell those notes to commercial banks for a small profit or “spread.” After thirteen years as a one-man show in the mercantile paper trade, in 1882 he took on as partner Samuel Sachs, the husband of his oldest daughter (Ellis, 2008). The firm’s partnership structure lasted 117 years until 1999 when Goldman Sachs sold equity shares in an initial public offering. Today it trades under the ticker “GS” and as of December 10, 2010 had an equity market value of $86 billion and over 35,000 employees worldwide.
Managers and strategists are often faced with a dilemma while trying to understand the determinants of profitability of industries they compete in as well as potential industries they may wish to compete. To this effect, several analytical frameworks are employed; the most widely used being the Porter’s Six Forces model. This paper seeks to bring to light the shortcomings of using the Porter’s Six Forces model as an analytical framework to determine which industries are profitable or not.
This paper will serve as a discussion on the topic of investment banking. In this paper the author includes various articles and thoughts that help to understand the background and principle of investment banking. This discourse will attempt to address this issue through explaining what investment banking is, introducing major investment bankers, and how investment banking affects our globally economy. Investment Banking Defined Investopedia (2008) stated this definition about investment banking, “A specific division of banking related to the creation of capital for other companies. Investment banks underwrite new debt and equity securities for all types of corporations.
Many organizations do not achieve the profits they anticipate by using incorrect methods or models to determine the true costs of products and services. This failure to correctly assess the costs associated with business not only affects the profit margin, but the organizations competitive advantage as well. In order to asses whether the organization is failing to realize optimum resource allocation, the organization should look at the methodology first popularized by Michael Porter titled the Value Chain Analysis (VCA). "VCA seeks to define the entire chain through which goods are supplied to a customer" (Booth, 1997, 2). The VCA can be a powerful tool in increasing an organization's competitive advantage; by correctly pricing products and assessing the true costs of materials and labor, organizations can align the improvements in efficiency, quality, and profits with its strategic objectives.