CONTRIBUTIONS OF MICHAEL PORTER CONTEMPORARY MANAGEMENT THINKERS

• MICHAEL PORTER
  CONTEMPORARY MANAGEMENT THINKERS
  
  
• MICHAEL PORTER

1.  MICHAEL EUGENE PORTER BORN ON 23 MAY,1947
2. AMERICAN ACADEMIC KNOWN FOR THEORIES ON ECONOMICS,BUSINESS STRATEGY AND SOCIAL CAUSES
3. HE IS THE BISHOP WILLIAM LAWRENCE UNIVERSITY PROFESSOR AT HARVARD BUSINESS SCHOOL

4. HE IS WELL KNOWN FOR THE VARIOUS ARTICLES ON THE SUBJECT OF COMPETITIVE STRATEGY AND COMPETITIVE ADVANTAGE
5. TILL DATE HE AUTHORED 18 BOOKS
6. HE HAS BEEN AWARDED MCKINSKY AWARD SIX TIMES FOR THE BEST HARVARD BUSINESS REVIEW ARTICLES OF THE YEAR AND IS ONE OF THE CITED AUTHORS IN BUSINESS AND ECONOMICS

• CONTRIBUTION

1. CORE FIELD UNDER HIS STUDY IS COMPANY STRATEGY AND COMPETITION
2. PROPOSED FIVE FORCES MODEL (1979-80)
3. COMPETITIVE STRATEGY(1980)
4. CONCEPT OF COMPETITIVE ADVANTAGE (1985)
5. GENERIC STRATEGIES (1985)

• MAJOR CONTRIBUTION
• FOCUS ON BUSINESS LEVEL STRATEGY:-HIS WRITING DEPICTED THAT HE FOCUSED HIS STUDIES ON THE BUSINESS LEVEL STRATEGY AS HE PERCEIVES THAT COMPETITION OCCURS AT BUSINESS LEVEL.
• BOOKS:-
• COMPETITIVE STRATEGY AND COMPETITIVE ADVANTAGE AND TECHNIQUES FOR ANALYZING INDUSTRIES AND COMPETITIONS(1980)
• FIVE COMPETITIVE FORCES MODEL:-WIDELY USED TOOL TO IDENTIFY AND DETERMINE THE POTENTIAL PROFITABILITY AND RISKS FOR AN INDUSTRY
• SUGGESTED THAT INDUSTRY DOES NOT ONLY COMPETE WITH THE EXISTING PLAYERS BUT THERE ARE OTHER FACTORS ALSO
• TRADITIONAL VIEW OF COMPETITION THAT CONSISTED OF PRICE,VARIETY AND QUALITY ASPECTS OF GOODS AND SERVICES WAS INSUFFICIENT
• INTRODUCED NEW DIMENSIONS OF COMPETITION THAT MUST BE TAKEN CARE FOR SURVIVAL AND SUCCESS IN MARKET PLACE
• PORTER’S FIVE FORCES MODEL
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• PORTER’S FIVE FORCES MODEL
• THREATS OF NEW ENTRANTS:

1. NEW ENTRANTS ARE THE POTENTIAL COMPETITORS BECAUSE THEY POSSESS ADEQUATE CAPABILITY TO JOIN THE MARKET
2. DISCOURAGED BY THE EXISTING INDUSTRY TO PROTECT THE PROFITS AND MARKET SHARE

• BARGAINING POWERS OF BUYERS:-MAY BE ULTIMATE CONSUMERS OR THE MIDDLEMEN

1. THE BARGAINING POWERS OF BUYERS MEANS THE CAPABILITIES OF THE BUYERS TO FORCE THE MANUFACTURER TO CHARGE LOW PRICES
2. BUYERS DEMAND HIGH QUALITY PRODUCTS (INCREASED COST FOR THE COMPANY). DUE TO WHICH LESS PROFITS
3. IF BUYERS ARE WEAK THEN THE FIRM CAN RAISE THE PRICES OR CAN REDUCE THE COST BY LOWERING DOWN THE QUALITY

• BARGAINING POWER OF SUPPLIES:-

1. THE SUPPLIERS ARE INDIVIDUALS OR FIRMS WHICH SUPPLY INPUTS SUCH AS RM,SERVICE,LABOUR ETC
2. SUPPLIER IN STRONG POSITION,THEY MAY RAISE THE PRICE OF INPUTS OR PROVIDE POOR QUALITY PRODUCTS
3. IT AFFECTS THE REPUTATION AND RESULT IN LOW MARKET AND PROFITABILITY
4. THREAT OF SUBSTITUTES AND ALTERNATIVE PRODUCTS
5. A FIRM OF A PARTICULAR INDUSTRY HAS TO COMPETE WITH THE FIRMS IN OTHER INDUSTRIES AS WELL
6. IF THE OTHER INDUSTRY IS OFFERING A SUBSTITUTE PRODUCT AT PRICE FAR LESS THAN THE COMPANY'S PRODUCT,IT WILL AFFECT MARKET SHARE AND PROFITABILITY

• RIVALRY AMONG EXISTING PRODUCTS:-

1. DEPENDS UPON THE NUMBER OF COMPETITORS AND THEIR STRENGTH
2. THE COMPETITION MAY BE DUE TO REDUCED PRICE,ENLARGED PRODUCT LINES,PROMOTIONAL EFFORTS AND DEVELOPMENT OF NEW PRODUCTS

• CRTICISM

1. HIS ANALYSIS IS INDUSTRY SPECIFIC RATHER THAN MARKET SPECIFIC
2. BASED UPON THE PERFECT COMPETITION WHICH IS RARE

• VALUE CHAIN MODEL
• INTRODUCED IN HIS BOOK COMPETITIVE ADVANTAGE:CREATING AND SUSTAINING SUPERIOR PERFORMANCE IN 1985

1. THE AIM OF THE MODEL WAS TO PROVIDE A FRAMEWORK BY USING WHICH AN ORGANIZATION CAN ANLYZE AND MANAGE DIFFERENT ACTIVITIES TO GET SUPERIOR PERFROMANCE AND GAIN THE COMPETITIVE ADVANTEGE
2. AIMS AT ANALYZING VARIOUS ACTIVITIES WITHIN AND OUTSIDE THE ORGANIZATION AND USED IT TO DEINE THE COMPETITIVE STRENGTH OR POSITIONS OF THE ORGANIZATION
3. PORTER DEFINED THAT ORGANIZATION IS NOT JUST COMBINATION OF MACHINERY,PEOPLE AND MONEY BUT IT IS MUCH MORE THAN THAT SO EACH AND EVERY ASPECT OF THE BUSINESS SHOULD BE CONSIDERED SERIOUSLY TO FORMULATE BETTER AND EFFECTIVE STRATEGY.

• FUNCTIONS OF THE VALUE CHAIN
• PRIMARY ACTIVITIES:- CREATION OF DELIVERY OF A PRODUCT OR SERVICE
• IN BOUND LOGISTICS
• OPERATIONS
• OUTBOUND LOGISTICS
• MARKETING AND SALES
• SERVICES
• SUPPORT ACTIVITIES

1. SECONDARY ACTIVITIES
2. PROCUREMENT
3. HUMAN RESOURCE MGMT
4. TECHNOLOGY DEVELOPMENT

5. INFRASTRUCTURE
   
   
   
   

• CLUSTER MANAGEMENT

1. CLUSTER IS BASICALLY A GROUP OF INTERCONNECTED COMPANIES AND ASSOCIATED INSTITUTIONS IN A PARTICULAR FIELD,LINKED BY COMMODITIES AND COMMENTARIES
2. IN CLUSTER MANAGEMENT HE FOCUSED ON EXTERNAL FACTORS
3. COMPETITIVE ADVANTAGE OF ANY ORGANIZATION IS MAINLY DETERMINED BY THE FACTORS WHICH LIE OUTSIDE OF THE COMPANY OR EVEN BEYOND ITS INDUSTRY
4. FOR GAINING COMPETITIVE ADVANTAGE IT CAN NOT SOLELY DEPENDENT ON MANAGERIAL AND INTERNAL PROCESS DEVELOPMENT BUT THE RELATED EXTERNAL ENVIRONMENT IS ALSO VERY IMPORTANT

• DIAMOND MANAGEMENT

1. DEVELOPED AN ECONOMIC MODEL FOR SMALL SIZED BUSINESS TO HELP THEM UNDERSTAND THEIR COMPETITIVE POSITION IN GLOBAL MARKET
2. ALSO KNOWN AS THE PORTER DIAMOND THEORY OF NATIONAL ADVANTAGE OR PORTER’S DOUBLE DIAMOND MODEL
3. NAMED BECAUSE ALL FACTORS THAT ARE IMPORTANT IN GLOBAL BUSINESS COMPETITION RESEMBLE THE POINTS OF DIAMOND
4. GIVEN IN HIS BOOK THE COMPETITIVE ADVANTAGE OF THE NATIONS IN 1990
5. ASSUMED THE COMPETITIVE NESS OF BUSINESS IS RELATED TO THE PERFORMANCE OF OTHER BUSINESS
6. THE MODEL SUGGESTED THAT FOUR ELEMENTS THAT DETERMINE THE LEVEL OF COMPETITIVENESS OF A COUNTRY ARE DEMAND CONDITIONS,FACTORS CONDITIONS,FIRM STRATEGY,STRUCTURE AND RIVALRY AND SUPPORTING INDUSTRIES. INFORMATION,INCENTIVES AND INFRASTRUCTURE WERE ALSO KEY TO THAT PRODUCTIVITY
7. INTERLINKED EACH ELEMENT THAT ARE RESPONSIBLE FOR ORGANIZATIONAL EFFECTIVENESS

• GENERIC COMPETITIVE STRATEGIES
• THREE GENERIC STRATEGIES THAT NEED TO BE TAKEN INTO CONSIDERATION BY A FIRM IN ORDER TO OUTPERFORM OTHER FIRMS

1. COST LEADERSHIP STRATEGIES: PRODUCING THE COST LEADERSHIP REFERS TO PRODUCING THE GOODS AT COST LESS THAN THAT OF COMPETITORS WITHOUT COMPROMISING WITH QUALITY. A FIRM TAKING STRATEGIC ADVANTAGE FROM THIS STRATEGY HAS TO REDUCE COST AT EACH LEVEL OF VALUE CHAIN
2. DIFFERENTIATION STRATEGY:- TO OFFER UNIQUE OR ADDITIONAL BENEFITS

1. PRODUCT DIFFERENTIATION CAN BE ACHIEVED BY THE INTRODUCTION OF NEW TECHNOLOGY,NEW IMAGE,BETTER CUSTOMER SERVICE,EXCELLENCE DISTRIBUTION CHANNEL

3. FOCUS STRATEGY:- INSTEAD OF APPLYING A STRATEGY TO THE ENTIRE MARKET, BY FOCUSING ON SPECIFIC SEGMENTS AND ACQUIRING A COST LEADERSHIP AND OR DIFFERENTIATION