Competitive strategy and strategic agendas. Introduction. Porter’s five forces and strategic analysis, страница 3

It is contended that Porter’s five forces can be significantly rejuvenated by going a level deeper to the stakeholders who are driving these key forces and to their underlying agendas.

Stakeholders and Agendas are defined as follows:

•  A stakeholder is a person or group of individuals who have a significant influence over the strategic decision-making process, or over its implementation.

•  Stakeholder agendas are the underlying attitudes, dispositions and anxieties towards a certain course of action. These agendas can be characterized as positive attractors (‘turn-ons’) or as negative repellers (‘turn-offs’).

Stakeholder analysis has been exploited most commonly in strategic management from an internal organizational perspective (Piercey, 1989). While broad external stakeholder analysis is often advocated, for example, to include the analysis of government, customers, staff and regulatory bodies, etc. this is typically focused on the macro-level organizational context. A more novel application now explored here which is to deploy this concept directly to Porter’s five competitive forces within a firm’s more immediate industry context.

Each one of Porter’s competitive forces is amenable to stakeholder agenda analysis in one form or another. The repellers are drawn again in proportion to the relative strength of the agenda. These agendas can be potentially elicited by asking the stakeholder involved but in practice, those agendas may need to be inferred directly from their behaviour or indirectly from general industry knowledge. This we effect by looking at some short case studies and mini-examples across the five forces as follows:

•  Buyer power and supplier power — a major services company

^•• Entry barriers — the Internet industry

Substitutes — the      strategy consulting industry

•  Rivalry — the home shopping market

Buyer power and supplier power – the case of a major services company

The following analysis is drawn from a recent strategy review of a major services company operating in tough and competitive markets. The analysis highlights the extent to which industry competition is determined as much by psychological dynamics as it is by objective market structures. It also highlights the importance of proactive management of psychological states and stakeholder agendas in managing a competitive position and in managing the competitive forces around such a position.

In this short case study one of the company’s operating divisions is servicing large and powerful retailers through longterm supply contracts. Initially we see stakeholder agendas drawn up from the retailer’s perspective and then from the wholesaler’s position.

Figure 4 depicts the agendas of a retailer (as the buyer) in relation to being supplied by a services company, operating in a highly competitive market. We begin first with the attractors or turn-ons that shape buyer power.

InFigure 4,the extentto whichthe services company can cut cost is a key attractor from the retailer’s point of view. Of equal importance is the need for the retailer to maintain operational service quality. If this falls short of the required standard the retailerwillinvariablyexperiencebothhigher costs elsewhere in its value chain and also some organizational disruption.

The perceived need by the retailer to have a close personal relationship with the service supplier at a senior level is also driven by the fear of organizational disruption. With this close account relationship in place the retailercanreadilyholdtheservicescompany accountable for any error. This helps the retailer to gain confidence that operational difficulties are unlikely.

Turning now to the ‘repellers’ (from the retailer’s point of view), these include the services company being unable to provide tracking information about where products are located at a particular point in the supply chain.Withoutthisdata theservicescompany is unable to minimize stock and the retailer might then lose sales through unnecessary stock-outs (again see Figure 4).