ASSIGNMENT: 4

SUBMITTED BY RAMSHA ZAFAR

ID NO: 7771
COURSE: ORGANIZATIONAL THEORY AND
DESIGN
SUBMITTED TO: MAAM BUSHRA SHAHZAD

1
Q. Examine the framework for selecting a right-fit b/w strategy and organizational
design through porter’s approach.

Answer:
Porter hypothesized that understanding both the competitive forces at play as well 
as the overall structure of 
the industry is crucial for effective, strategic decision-making and the development 
of a compelling competitive future strategy.

1. Competitive rivalry:

Industry rivalry usually takes the form of jockeying for position using various
tactics (for example, price competition, advertising battles, product introductions).
This rivalry tends to increase in intensity when companies either feel competitive
pressure or see an opportunity to improve their position.

In most industries, one company’s competitive moves will have a noticeable

impact on the competition, who will then retaliate to counter those efforts.
Companies are mutually dependent, so the pattern of action and reaction may harm
all companies and the industry.

Example:  Competition with McDonald's (Strong Force) McDonald's faces

tough competition because the fast food restaurant market is saturated. This
element of the Porter's Five Forces analysis model tackles the effects
of competing firms in the industry environment.
2. Power of suppliers:
In Porter’s five forces, supplier power refers to the pressure suppliers can exert
on businesses by raising prices, lowering quality, or reducing availability of
their products. When analyzing supplier power, you conduct the

2
industry analysis from the perspective of the industry firms, in this case referred to
as the buyers. According to Porter’s 5 forces industry analysis framework, supplier
power, or the bargaining power of suppliers, is one of the forces that shape the
competitive structure of an industry.
Example: low supplier concentration, low switching costs, no threat of forward
integration, more buyer price sensitivity, well-educated buyers, buyers that
purchase large volumes of standardized products, and the availability of substitute
products.

3. Power of buyers:
The Bargaining Power of Buyers, one of the forces in Porter’s Five Forces Industry
Analysis Framework, refers to the pressure that customers/consumers can put on
businesses to get them to provide higher quality products, better customer service,
and/or lower prices. It is important to keep in mind that the bargaining power of
buyer’s analysis is conducted from the perspective of the seller (the company). The
bargaining power of buyers would refer to customers/consumers who use the
products/services of the company.
Example:
A buyer may demand a higher quality product that brings long-term gains, such as
choosing a car that costs more to purchase but is more economical to run
4. The threat of new entrants:
the factor of Threat of New Entrants analyzes how likely it is for a new entrant or
entrants to enter the competitive environment a company operates within. There is
less chance of this happening if there are at least some form of barriers to entry
into the industry such as strict regulations, need for specialized knowledge or high
investment requirements.
Example: a high threat of entry means new competitors are likely to be attracted to
the profits of the industry and can enter the industry with ease. ... An example of
the threat of new entrant’s porter devised exists in the graphic design industry:
there are very low barriers to entry.

3
5. The threat of substitute products or services:
The threat of substitutes is the availability of other products that a customer could
purchase from outside an industry. The competitive structure of an industry is
threatened when there are substitute products available that offer a reasonably
close benefits match at a competitive price.
Example: The demand for performance apparel, sports footwear and accessories is
expected to continue to grow. Therefore, this force does not threaten Under
Armour in the foreseeable future.
Strategies:
 Cost leadership
Your goal is to increase profits by reducing costs while charging industry-standard
prices, or to increase market share by reducing the sales price while retaining
profits.
 Differentiation:
To implement this strategy, your company's products need to be significantly better
than the competition's, improving their competitiveness and value to the public. It
requires thorough research and development, plus effective sales and marketing.
 Focus:
Successful implementation entails the company selecting niche markets in which
to sell their goods. It requires an intense understanding of the marketplace, its
sellers, buyers and competitors.