Explanation and Analysis of Strategic Planning

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We will begin our analysis of the most well-known strategic planning models with
1) MICHAEL PORTER'S 5 FORCES
In preparing a business strategy, it will be necessary to analyze the sector in which the company operates, assessing the characteristics and the actors involved, the competitive dynamics resulting from it, as well as establishing its position in relation to competitors.
One of the schemes most used for this purpose is the model of the 5 competitive forces of Porter that allows to study the forces acting on the company, limiting its long-term profitability, in order to counteract and reduce their power.
According to the scheme, 5 are the factors that act from outside the company:
a. Intensity of competitive rivalry
b. Bargaining power of suppliers
c. Bargaining power of customers
d. Threat of new entrants
e. Threats of substitute products or services.
a. INTENSITY OF COMPETITIVE RIVALRY
The intensity of competition and rivalry affect profitability in any activity by the company: pricing policies, new product development, services and after sales support, advertising campaigns designed to appeal to customers more than competitors. The situations may differ depending on the number of competitors on the market, the market shares held by each competitor, the diversity of competitors, product differentiation, excess capacity, exit barriers (i.e. fixed costs to exit the market).
b. BARGAINING POWER OF SUPPLIERS
The bargaining power of suppliers depends, among others, on the size of the firm compared to that of suppliers, the presence and relevance of substitute products purchased by the company (if it is difficult to find supplier products, if the company wants to change supplier, it could from incur in additional costs to locate other suppliers), the possibility of integration upstream from suppliers, the availability of adequate information for company.
Company should also take into consideration price sensitivity, economic and financial conditions, the cost of the materials/parts bough by suppliers over the total cost, product differentiation, competition and the importance of the quality of the product.
c. BARGAINING POWER OF CUSTOMERS
Customers might have the same bargaining power as suppliers. It depends on the size of the company, the presence and relevance of substitute products purchased by customers, the incurring travel costs in the case customers want to purchase products from other companies, the availability of adequate ...