Management strategies Assignment Example | Topics and Well Written Essays - 1750 words

Management strategies - Assignment Example The competitive forces that shape strategies ensure that the strategy stays in power. Competitive forces mold strategies to effectiveness and as such the strategy stays in power. According to Porter (2008), there are five forces that shape strategies. These forces determine the profitability of an industry in the long run by influencing how the economic value it creates is apportioned. These forces are supplier power, buyer power, competitive rivalry, the threat of substitution and the threat of new entry. Supplier power can determine the profitability of a company. Suppliers are the providers of raw materials, labor or other materials used in production. Suppliers have the power to drive up the prices of the inputs used in production. When the suppliers raise the prices of the inputs used in production, the company ends up having high production costs and this, in turn, reduces profit. The fewer the suppliers a company has, the more the power they have on the company and the more th ey determine the profitability of the business. The buyers are the consumers of a company’s product. The buyer has the power to determine the profitability of a company because they influence sales. When the buyers cease from consuming a company’s products sales will be low hence low profits. Buyers also have the power to determine the prices of a product. When a company deals with few powerful buyers, they have the power to dictate various terms of doing business such as the prices of the product.