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Porter's five forces, sound e-business strategy, SMART

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Q-1 In which areas of the strategy formulation, Porter's five forces model will help, and how?

Q-2 What is the importance of having a sound e-business strategy? What could be some of the potential threats in the absence of a strategy?

Q-3 What is the importance of online revenue contribution in defining an e-business strategy? What are SMART objectives?

Q-4 How does the generic strategy model help in strategy formulation?

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This solution details Porter's five forces model, sound e-business strategy, SMART objectives

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Q-1 In which areas of the strategy formulation, Porter's five forces model will help, and how?

Strategy formulation entails development of long term plans for the effective management of opportunities and threats in light of corporate strength and weaknesses. It involves defining the corporate mission, objectives, developing strategies and setting policy guidelines. Michael Porter developed a framework for developing an organizational business strategy by utilizing five competitive forces model listed below:

1. The threat of new entrants
2. The bargaining power of suppliers
3. The bargaining power of customers (buyers)
4. The threat of substitute products
5. The rivalry among existing firms in the industry

Porters five competitive model framework can help an organization in strategy formulation in the following ways.
Mission: When developing a mission, the company must define what its purpose is in the economy and how it will achieve that purpose. If the purpose of the company is to become a leader in the automobile manufacturing industry, them the company must clearly understand the rivalry that it will expect to face and how to succeed in that environment. In addition, it must also look at the bargaining power of both the customers and suppliers and how to better deal with them. Porters five forces model would be very handy in developing the company mission.

Objectives: The end result of the planned activity is called an objective. Objectives are very important because they clearly define what is to be accomplished and by when. ...

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Edwin Sinclar, MBA
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  • Bachelor of Science , Berea College
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