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After revising corporate strategy notes from 10am this morning, I found that among frameworks that our tutor has taught, the ‘five forces framework’ is the most complicated one. Therefore, I aim to give myself better memories with the help of this blog.

Firstly I would like to showcase a figure:

 
(Figure 1)

As from the figure above we can easily draw up the sources of competition of a ‘strategic business unit’ (SBU) as ‘threat of entry’,’ supplier’s power’, ‘buyer’s power’, ‘threat of substitutes’ and ‘degree of rivalry’. In fact, the original figure presented by M. E. Porter adopted by the book ‘Exploring Corporate Strategy’ is much more professional with different wordings but of relatively similar meanings.

Now I am going to present a summary of the framework with wordings from the textbook:

 
(Figure 2)

It may not be a good idea to just read what is typed in Figure 2 if you really want to study what is happening on the ‘SBU’. A case analysis should gain us more thorough ideas about how the framework facilitates better decision making. However, I am only a student and not an expert in such field, therefore I am just using this blog piece to illustrate my greatest findings on the ‘five forces framework’:

  1. Before doing my job placement in a large corporation, I did not have much idea about SBU. After doing my placement for the first day, I knew that my ‘company’ is a branch of a ‘corporation’ and within the ‘division’ that I am working in, there can be colleagues with namecards addressing different titles and tasks responsible for—the ‘tasks’ can give outsiders a wrong sense that the two persons are working in different places! Able to follow my not-so-clear mind-map? In a nutshell, SBU—the strategic business unit that can be analysed can be a task group within a division in a branch of a corporation; they maybe just doing one event at one time and for that ‘one event’ and ‘one time’ we can do ‘one analysis’ but not more.

  2. In the concept of substitution, I had never thought of the consumer’s way of thinking as a threat concerning product substitution. For instance, I did not aware that my rejection to a bank’s invitation to join a plan can be something related to ‘substitution’ of my money from maybe joining the plan to steadily saving dollars for academic usage.

  3. The last finding from my morning revision is that contracts between the suppliers and the buyers and the reputation of either one of them can be decisive factors for managing an SBU’s strategy.

To summarise features of the ‘five forces framework’, we can regard the powers of the suppliers and the buyers as ‘attractiveness’ while ‘threats’ are concerning the ‘underlying forces’ and ‘changes’ in the micro environment of the industry. ‘Substitution’ is sometimes concerned with ‘competitors’ but is sometimes a consumer’s choice. Last but not least, all the forces are interlocking and can not be independently analysed for improving corporate strategies; when analysing, the ‘degree of rivalry’ of each of the forces is also essential to address.

(I finished this blog piece within approximately 1 hour. How many wordings? Over 2666, but my word-count for typing English characters is still 45/min—seemingly not so fast still? Together with the fact that I was also thinking, reading, referencing, drawing and pasting figures, I am confident that I can be very competitive in the job market of clerical work… While my preference is to find jobs in the printed media… Or, for the high salary, in a governmental department. The last two are my dreams within 2 years’ time.)