Today I have been... 

Reading more of unit 1 (p19 on)

Why?

Required Reading.

So What? 

Porter defines:-

• Industry: The fundamental arena in which competition occurs
• Competitive strategy: The search for a favourable position in an industry

The text asks how this is relevant to a not-for-profit (NFP) organisation.

Do NFPs operate in a competitive environment with rivals? Do they operate in an "industry" at all?

Thinking more about an industry as a set of producers of a particular product or service it becomes a little easier to see how voluntary, educational, medial, religions, government etc organisations are also part of industries.

Markets - clusters of consumers. NFP and "FP" organisations provide products and services in those markets. The term "customer" is becoming more common in NFP, although many are uncomfortable with the term and its implications. The gradual inclusion of the term "customer" is becoming obvious at $EMPLOYER.

Remember too that all organisations (FP or NFP) are competing for the same resources, eg. staff, money, physical location and materials, suppliers etc.

Early on, Porter's developed his Five Forces model for use as a framework to help understand the key competitive forces in a given industry. Understanding the nature of an industry's structure helps understand the "rules of competition". You can use this in building your competitive strategy to "cope with and ideally to change those rules in the organisation's favour".

So to summarise, to sustain and defend your competitive position, you need to be able to ensure your activities, their fit and your resources are used to differentiate in a unique, profitable way.

Previous authors have argued that the main goal of any business is profitability. So the fundamental strategic challenge is to ensure you are correctly positioned in profitable markets. Top managers develop strategy and middle managers implement it.

But you can't manage your external environment, can you? Well you maybe can influence the near environment but you can't even influence the far environment. The example of how Japanese business in the 70s, 80s and 90s marched all over many other international industries by changing the rules of competition is cited.

As porter mentioned in his article, the "be operationally efficient" strategy only worked for the Japanese for so long. Once the competition caught up, these firms have had to look at other sources of competitive advantage.

Another big change in the 1990s has been a technological factor. The 1990s saw technological developments reach the mass market at an amazing rate. Many large firms have had to cope and in some cases build on this change.

There's also been deregulation and privatisation everywhere. We are now in a global economy and contemporary strategic thinking additionally needs to take account of this.

This "hypercompetition", according to Porter, is a self-inflicted wound (see previous entries).