Posted at 03.10.2018
Nowadays, the economic scenery is complicated and changeable. As the development of globalization, the international competition intensifies. The needs of consumers change constantly. The knowledge and technology develop swiftly. Moreover, there are a few unstable factors such as terrorism and local war which impacts on business. Thus, companies are confronted with great challenges in order to achieve survival and development. Thus the statement that companies need not take too much effort to get success in standard economic times when economies are growing is not appropriate. Although, in difficult times, like the current global monetary downturn, some companies may be met with great crisis or even individual bankruptcy, some companies gets good opportunities and become very successful by taking advantage of the problem. This newspaper first talks about the opportunities and risks with that your companies are faced in normal times. Then, the paper analyzes the opportunities and hazards with which the companies are faced in difficult times.
In order to make accurate proper formulation and proper implement, the exterior environment and internal environment is highly recommended. The five makes model was submit by Michael Porter. The five pushes model has a global and significant influence on the companies' tactical formulation. The five pressure model is used to investigate the competitive strategies and can assess the competitive conditions effectively. The five makes are: dangerous of access by potential rivals, industry rivalry, bargaining power of customers, bargaining power of suppliers and risks of substitutes (Hill and Jones, 2009, pp53).
The competition can't be only regarded as competition among challengers. It is a system that involves five forces. In regular times, as the economy expands, the competitive environment may become more difficult. The industry with extensive profitability provides about investment to this industry. When the economy expands, the investment will increase. Then the risky of access by potential competitors will increases. The new entrants will compete with the existing opponents for recycleables and market stocks. This may cause the success of the industry street to redemption or even threats the survival of some existing companies. Thus the competition in this industry becomes fiercer. When the economy expands, the research and technology develops fast. Thus the merchandise are kept up to date or invented swiftly. The risks of substitutes are severe. Besides, the level of utilization of consumers is enhanced as a result of growth of current economic climate. The consumers can afford to buy more products. However, as the competition of the industry increases, the bargaining vitality of buyers increases. Although there may be more suppliers, the demand for fresh material also raises. So, it's possible that the bargaining vitality of suppliers increases.
Even if in regular occasions when economies are growing, the competitive conditions remain very severe. Sony's experience will confirm the ferocity of the opponents. In 1975, Sony appeared to produce an unbeatable leading place due to their advanced Betamax product, which is known as to be superior to their competitors' VCR product. Sony possessed a competitive gain over their challengers. However, Sony was defeated. The two relatively minor competitors of this industry, JVC and Matsushita, get allied. The Betamax share of the global market was captured and ruined by the alliance. Finally, Sony had to avoid the creation of Betamax in the past due 1980s (Pech and Slade, 2005). In typical times, companies take benefit of every opportunity to get developed. Companies even harm competitors to be able to get success.
In the usual times, there are more opportunities for companies to develop. The general external environment is relative easy for companies. The company may become insensitive to the change of the external environment or even complacent about its present situation. This frame of mind is one big hazard for the proper goals of the company (Pech and Durden, 2004). The complacency can cause the managers of the business are unwilling to listen to the unpleasant information. The professionals are isolated from objective information and make incorrect decision. The failing of Xerox has given a good lesson (Pech and Durden, 2004). Besides, the complacency can make the company underestimate the enemy and overestimate one's own capacity. An example is the Vietnam War. The USA was stuck in the warfare because of their underestimating the capability of Vietnam troops (Pech and Durden, 2003). Besides, the business may struggle to adapt. The business is unwilling to be proactive. The innovation is dismissed. It prefers to be always a follower rather than leader. Many of these may shorten an organization's life time (Pech and Durden, 2004).
The healthy scorecard is an instrument for strategic put into action. The well balanced scorecard was proposed by Robert Kaplan in Harvard Business Institution and David Norton in Nolan Norton Institute in 1990s (Kaplan and Norton, 2004). The healthy scorecard take shared eyesight and strategy of the organization as primary. It adopts included and balanced viewpoint to enhance the shared vision and strategy of the business to cement goals of subordinate departments in financial, customer, internal processes and technology and learning perspectives (Kaplan and Norton, 2004). The condition of goal use in financial, customer, inner processes and development and learning perspectives is measured. Then in term of the responses, the strategies of the company are adjusted and the proven eyesight and goal are revised to make sure the strategies can be executed effectively. The long-term success and development of the business can be became aware. The business can get success.
In normal times, when economies are growing, the firms get more opportunities to get developed. However, that does not mean the business can get successes easily. Only once the company gets more competitive advantages and gain above-average dividends, it is successful. When economies are growing, your competition becomes severer. This situation is like sailing against the current. The boat will either go ahead or keep dropping. Thus the business needs to free no work to strive for competitive advantages to get success, or the company would lag in back of.
In difficult times, some companies are faced with the fall of profitability or even bankruptcy. However, some companies may meet good opportunities and be very successful. In difficult times, the risky of entry by potential competitors lowers. In difficult times, the monetary depression causes the loss of investment. You will see fewer entrants. Besides, the threatening external environment may produce severe challenges to this industry. Some competitors may go bankrupt. Thus the tournaments are relatively eased. As the firms of the industry decrease, the bargaining vitality of clients is decreased. As investment decreases, the updating speed of substitutes decreases. Thus although the general exterior environment is difficult, the industry environment is relatively advantageous to some companies. The business can perform success by taking advantages of the situation.
The emergence of the united states is an average example. Through the world war one and the world war two, the united states took features of the situations to make arms trade. As many countries were mixed up in war, the competition in forearms industry was not keen. On the other hand, the arms industry has high entrance hurdle. Thus the bargaining electricity of the buyers was weak. In the mean time, as the provider of hands, the bargaining electricity of the USA is strong. Therefore, the united states obtained tremendous earnings from the hands industry in the difficult times.
Nowadays, the key difficult times are induced by global financial crisis. As a matter of factors, if the term "crisis" is translated into China, it preserves two Chinese people. One persona means threats and another means opportunities. Some companies may seize the opportunities in the global financial crisis and be successful. As the rivals of the industry may be bankrupt, the industry shrinks. The market show of some companies may be boosted. Besides, the fund chains of many companies rupture and the investments of several companies depreciate. This provided good chances for a few company to accomplish merger and acquisition. For some companies, the financial crisis may have good effect on promoting their external competitive electric power.
As the information is unpredictable, the pace of change boosts in business. As a lot more companies are attacked by the turbulence of the external environments, the companies will change. This is often a reactive mother nature. The global financial crisis can facilitate some companies to improve, enhance their strategies and promote their inner conditions. The global financial meltdown triggers the manpower flow. Some companies get more outstanding employees. Besides, some companies can have more support and assistance from government.
Besides the affect of external environment, the inner environments of the business also very important. The global financial meltdown can give go up to the emergence of new industry and new products. If the change of the industry is noticed timely to adopt new solutions and new methods, the company can meet the demands of new industrial modification. Therefore, creating needs and checking out market is vital. The business should establish an information system. The company should check the exterior environment, gather the urgent data and obtain clear, prompt, unbiased and detailed information (Pech and Durden, 2004). Besides, the information should be examined rapidly and widely and the managers and employees can find the threats and opportunities that it announces. Predicated on the info, the strategies of the business are formed or adjusted. Meanwhile, an intelligent response by employees is demanded (Pech and Slade, 2004).
In difficulty times, some companies can take advantage of the situation to reach your goals. The important reason behind their success is their potential to check out and process information to make immediate response. The company can analyze the info to see the threats and opportunities. Therefore, they make appropriate strategies to seize opportunities to get competitive advantages. Thus, opportunities acknowledgement plays an important role in the success of the firms. Charge Day, the winner of the 2000 Ernst and Young Business owner of the entire year Award in New Zealand and who owns Seaworks, set a good example to prove the value of opportunities identification (Pech and Cameron, 2006).
The global financial meltdown gives rise to the demand for differential products and service. Inside the global financial crisis, some companies may take advantage to help the transformation. The business should improve the resources, promote functions, get center competency and develop differentiation. According to financial, customer, inside processes and invention and learning in the healthy scorecard, the business adjusts and modifies the strategies to get success.
In order to make successful strategy, both the exterior environment and the internal environment you need to considered. In common times, the overall environment is good for the introduction of companies. Although economies are growing, the tournaments become fierce. Meanwhile, the internal environments also are likely involved on the success of the business. Thus, to be able to get success, good general environment is insufficient. The company must also spare no work to get competitive advantages. In the difficult time, there are still opportunities. Although the general external environments are not good, some companies with excellent information system can be hypersensitive to opportunities and get opportunities to get success. Besides, the exterior environments, the business can also take benefit of this situation to facilitate change and promote the power and core competency of the company to get success.