Dhl Strategic Management Essay

Michael Porter wrote about five forces affecting the profitability and viability of companies. The five forces are existing competitors, new entries into the market, substitute products, bargaining power of customers, and the bargaining power of suppliers. (quickmba)

Porter’s Five Forces is a framework that consists of five competitive forces, threat of entry, power of supplier and buyer, threat of substitution and competitive rivalry. These forces facilitate the analysis of the task environment of an industry or company (Wheelen and Hunger, 2009).

This article has started revolutionary thinking about what are the different forces in addition to direct competitors that affect competitive strategy of an organization and how better understanding of industry structure and these forces, also known as " Porter 's Five Forces", derive organization 's strategy to achieve sustainability and higher profitability. Author has explained the other factors that contribute for industry structure like industry growth rate, technology and innovation, external factors, government & regulations and complementary products and services. Industry structure changes while responding to changes in competitive forces. Author also discussed the framework to perform industry analysis and avoid common pitfall while conducting analysis. In this review I will summarize five competitive forces explained by Micheal E. Porter and their implication on organization 's strategy. Further, I will discuss the relevancy of Porter 's five forces framework in current scenario.

There are many strategies discussed by Jobber and Chadwick (2013) to obtain such competitive advantage, either on broad or narrow or broad scope dimensions, or by different competitive base of differentiation or cost.

As we begin to strategically plan for our business, it is important for us to take a deep dive into our competitive environment to understand where we are strong competitively and where we are weak competitively. An analysis of the forces driving industry competition using M.E. Porter’s Five Forces Model will assist us in determining where the power lies in a business situation as we begin to plan. We must understand how they work in our industry and how they affect our particular situation. Whatever the collective strength of these forces is, our job as the strategists of the organization is to

“There are 2 types of Competitive Advantage. Firms with lower relative cost than rivals have a Cost Advantage. Firms that are able to charge higher prices (have a higher WTP) than their competitors have a Differentiation Advantage. Firms that have both, low cost and high WTP, have Dual Advantage”( Proenca,Jose).

Porter’s Five-Forces Model of Industry Competition is the most widely utilized tool to evaluate the competitive environment (Dess, Lumpkin, Eisner, & McNamara, 2014). Dess, Lumpkin, Eisner & McNamara (2014) define Porter’s model

Porter’s Five Forces Model of Industry Competition is “A tool for examining the industry-level competitive environment, especially the ability of firms in that industry to set prices and minimize costs.” (Dess et al., p.55). The five forces are threat of new entrants, buyer bargaining power, supplier bargaining power, threat of substitute products and intensity of competition. All of these forces affect CCR differently (refer to figure 2).

Porter 's five forces framework assesses the competitive pressures a company faces within the industry. The five forces of competitive pressure include: competition from rival sellers, competition from potential new entrants to the industry, competition from producers of substitute products, supplier bargaining power and customer bargaining power. The model helps us determine the strength of competitive pressures and profitability of an industry. [3]

The Porter`s five forces are threats of new entrants, the bargaining power of buyers ,product substitution and intensity of rival of rival among competitors .These forces measure the competitiveness of the market and also helps the company to identify strategies to use to penetrate such and gain market share.

One of the most important and renowned among the managers for making strategy decisions is the five competitive forces model that determines industries structure.

Porter's Five Forces can be applied to particular companies, market segments and industries with the step-by-step analysis of market structure and competitive situation. First of all, when implementing this module in organizations, it is necessary to determine the scope of the market to be analyzed. Following, all relevant forces for this market analyzed and key forces are identified (Gerry and Kevan, P.117). Actually some organizational strategy and the longer-term goals are mainly based on or consistent with the key forces. Hence, it is not necessary to analyze all elements of all competitive forces with the same depth. Moreover, the key forces in the competitive environment will vary in different industry. Different forces take on prominence in shaping competition in each industry (Porter,

Porter’s five forces are used to determine the competitive intensity and attractiveness of a market. These are close forces that affect a company’s ability to make a profit and serve customers. If any of these forces change, a company must reassess its marketplace. The five forces include: the threat of substitute products, the threat of the entry of new competitors, the intensity of competitive rivalry, the bargaining power of customers and the bargaining power of suppliers.

DHL was established in 1969 by Adrian Dalsey, Larry Hillblom and Robert Lynn. The three partners were delivering shipping services, transporting documents by air only between Francisco, California, Hollywood and Hawaii so the goods can pass though customers with less delay noting that it was the only shipping company in the middle East. In 1982, Fadi Ghandour established Aramex in Amman, Jordan. Ghandour was born in 1959 to a Lebanese Muslim family. His father is Ali Ghandour, who was the chairman of the Jordian national airline. Fadi was graduated from George Washington University with a BA in political science. After graduating from college, Fadi was aiming to go through a business project in the Middle East. He felt that the Middle East needed someone to fill a niche in the international courier delivery business. Therefore, he met with William Kingson, Aramex has been founded which has developed to be nowadays a giant. Aramex started operations in Amman as a global provider of logistics and transportation solutions. As hierarchical division of Aramex, the chief sustainability and compliance officer of Aramex was Raji Hattar. As for Reem Khoury, she was the manager of CEO operations. The former chief operating officer was handled by Osama Fattakeh.

Porter’s Five Forces model is used to evaluate the degree of rivalry between competitors in a given industry through assessing the four forces that lead to this outcome. These forces are the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products.