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chose at least 4 posting and reply in 75 words for each follow-up response thus include critical analysis, and be supported by the relevant in-text citations and reference sources.
That will be a total of 4 paragraphs
chose any activity but at least two replies for activity 1 and two replies for activity 2
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Week 2 ‐ LA 2 ‐ Alioune Diaw
Alioune Diaw posted Jan 19, 2018 5:16 AM Subscribe
Learning Ac�vity 2:
The cargo shipping industry is a major factor behind globaliza�on (Geersbro, J., & Ri�er, T., 2014, Journal of
Business Market Management). Evalua�ng only the compe��ve external forces could bring the assump�on
that the amount of profit poten�al to the industry is fixed which limits considera�on to the general
environment and its opportuni�es. Elements of the general environment can be organized into factors
using the PESTEL analysis. This tool will assist in iden�fying how those factors influence an industry and the
companies within it. (
Chapter 3, Evalua�ng the External Environment p. 78, The Saylor Founda�on
).
The PESTEL analysis studies the:
Poli�cal environment of the firm and the industry. How does the government influence the evolu�on
and regula�ons of the business
Economical, condi�ons within which organiza�ons operate
Social factors inflic�ng changes to the business strategies and cultural trends.
Technological improvement that might affect industry or organiza�on’s ac�vity and profits
Environmental changes or physical condi�ons that directly affect organiza�on’s opera�ons
Legal enforcements, regula�ons that influence organiza�on’s ac�vity.
Changes in the business environment can create opportuni�es or threats for organiza�on. Studying the
environment shapes strategic decision that execu�ves make to a�empt to lead the organiza�on to success.
(Chapter 3, Evalua�ng the External Environment p.75, The Saylor Founda�on), (PEST Analysis,
MindTools.com)
Reference:
Geersbro, J., & Ri�er, T., 2014, Journal of Business Market Management, Vol. 7 Issue 1, p301‐305. 5p.,
ISSN: 1864‐0753, Accession Number: 95498326, Database: Business Source Complete NAICS/Industry
Codes: 327213 Glass Container Manufacturing.
Chapter 3, Evalua�ng the External Environment p. 78, The Saylor
Founda�on
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Week 2 ‐ LA 1 ‐ Alioune Diaw
Alioune Diaw posted Jan 19, 2018 5:15 AM Subscribe
Interna�onal container shipping industry headquartered in Europe – CMA CGM
Background of CMA CGM Group
TEU (twenty‐foot equivalent unit): 1,799,291
HQ: Marseille, France
Founded: 1978
Revenue: $15.7 Billion (USD)
Employees: 22,000
CMA CGM Group is the world’s third largest shipping company. They have a fleet of 471 vessels that call at
420 ports in 160 countries. In total they have 765 offices around the globe.
Their largest ship is the CMA CGM Georg Forster which can handle 18,000 twenty‐foot containers. Their
name is a French acronym which stands for “Mari�me Freigh�ng Company – General Mari�me Company.”
Learning Ac�vity 1:
1. How did the five forces of Porter affect the company in its industry based on the five forces analysis?
Compe��ve Rivalry
CMA CGM is ranking 3rd in the top 15 of interna�onal container shipping companies (PR Newswire, 2017.)
Studying its compe��ve rivalry will include an analysis of its level of compe��on in the industry (Business
Banking Coach, 2016, Using Porter’s Five Forces Model). Being a billion dollar company places it as one of
the dominant and compe��ve organiza�ons in the concentrated shipping industry. This also puts the firm in
a threatening posi�on against its imminent and subs�tute compe�tors and creates a need to �ghten
strategy around the protec�on of market share. Because the cargo shipping transport market is projected to
grow at a CAGR of 3.50% from 2016 to 2021, high rivalry will be imminent along with an increase in
industry concentra�on, a more diverse pool of compe�tors and less differen�a�on between them ul�mately
forcing the firms to compete based on prices rather than on uniqueness of their services. A ba�le to
maintain low fixed costs will be necessary to avoid shi�ing the surplus to customers and risking to lose
them. Exi�ng the industry will most likely not be an op�on since the focus would be on maintaining market
shares and seize opportuni�es.
Barriers to Entry
The forecast predicts a rather easy entry to the shipping industry and the growth is noted especially in
container transporta�on. New entrants to an industry tend to reduce the profit poten�al of the industry by
increasing its compe��veness. (Chapter 3, Evalua�ng the External Environment p. 91, The Saylor
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Founda�on) Because the growth is supposed to be mainly no�ced on ground level, poten�al new entrants
may be local or foreign transporta�on companies or contrac�ng cartage firms that enter the industry as a
compe�tor to CMA CGM. The companies can be in the truck transport or the trail transport such as CMA
CGM.
Threat of Subs�tutes
As a core leader in the industry, CMA CGM had so far secured its compe��ve advantage in the cargo
shipping industry. Due to the poten�al growth, the organiza�on will need to strengthen its service
performance and uniqueness to create customer loyalty. Execu�ves will need to pay close a�en�on to the
subs�tute industries’ performance and define new counter strategies for readiness.
The Bargaining
Power of Suppliers
The power of suppliers helps shape the profit poten�al of the industry by providing an input needed to
create the goods and services to sell to buyers (Chapter 3, Evalua�ng the External Environment p. 93‐94,
The Saylor Founda�on). Being able to control this force determines how the organiza�on can respond to a
dominant industry supplier’s bargaining so as to be able to control its own profitability. In 2011, Ship
Finance Interna�onal acquired two ships from CMA CGM to allow more cash flow into the company. “Ship
Finance Interna�onal has been acquiring second‐hand container vessels from liner companies…when the
downturn in world trade and vessel overcapacity led to a similar downturn in vessel prices” (Leach, Peter T.,
JoC Online. 3/21/2011, p14‐14. 1p., Container Ships*Industrial procurement). It is crucial for the company
to carefully manage suppliers’ input to avoid Forward Ver�cal Integra�on.
The Bargaining Power of Buyers
The rela�ve bargaining power between the industry’s compe�tors and its buyers can help shape the profit
poten�al of the industry. It is in CMA’s best interest to maintain low buyer leverage for poten�al price raise
to achieve greater profit. Also avoid standardized products and services to limit switching of costs, changing
of vendors and keep the organiza�on’s iden�ty.
2. How are the five forces affec�ng the general business environment of the container shipping
industry, and CMA CGM’s overall strategic planning processes, unique to the industry in general and
the organiza�on in par�cular.
The five forces of Porter model was used to analyze the a�rac�veness of the container shipping industry
structure and evaluate CMA CGM’s compe��ve posi�on. The external environmental state impacts the
internal environment of the company. Thus, an analysis of the industry’s sustainability and its level of
profitability will be a useful support during the strategic planning process and future investment decisions.
References:
CMA CGM website: h�ps://www.cma‐cgm.fr/
UMUC Library: PR Newswire, London, Jan. 9, 2017. LON‐Reportbuyer, Ar�cle,
201701091209PR.NEWS.USPR.BR83180, Database: Regional Business News
Business Banking Coach, 2016, Using Porter’s Five Forces Model, Retrieved From:
h�ps://soundcloud.com/businessbankingcoach/using‐porters‐five‐forces‐model
Chapter 3, Evalua�ng the External Environment p. 91, 93, & 94, The Saylor Founda�on)
https://www.cma-cgm.fr/
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Leach, Peter T., JoC Online. 3/21/2011, p14‐14. 1p., Container Ships*Industrial procurement, ISSN:1542‐
8524, Accession Number: 67737125, Ar�cle, Ship Finance Interna�onal Ltd.
The five compe��ve forces that shape strategy (1996). [Video] Harvard Business Review. Retrieved from
h�ps://www.youtube.com/watch?
v=mYF2_FBCvXw
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Learning Ac�vity#1:Gordon
Caitlyn Gordon posted Jan 18, 2018 7:54 PM Subscribe
Chosen Company: GSK ( GlaxoSmothKline plc) Headquarters: London, UK
This pharmaceu�cal company was established from a merger in 2000 with the companies of Glaxo Wellcome and
SmithKline Beecham. In regards to Porter’s Five Forces GSK has been through its fare share of challenges. GSK’s
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and the pharmaceu�cals industry itself is a strong force to be wrecked with. The following is Porter five forces
model analysis for both the GSK and pharmaceu�cal industry.
1.The intensity of rivalry: The pharmaceu�cal business is very money‐oriented industry which means compe�tors in
this industry have a large amount of funds to keep up with high cost of the industry. GSK specializes in respiratory,
cardiovascular, neurological, and dermatology drugs. Its biggest compe�tor is the american pharmaceu�cal company
called Pfizer(“GLAXOSMITHKLINE PLC”, n.d.).
2. Threat of New Entrants: The level of complexity and cost associated with developing and studying
pharmaceu�cals lowers the number of compe�tors in this par�cular industry. Furthermore there are strict rules that
are enforced not only by England but to the world when it comes pharmaceu�cals. The only new entrants that GSK
would have to worry about is current compe�tors merging to form bigger corpora�ons.
3. Threat of Subs�tutes: The current threat of subs�tutes for GSK and its compe�tors are the demand from
consumers to have products that have less chemicals or less major effects on the body. Consumers want products
that are going to have less of effect not only on themselves but on the environments.Consumers are spending more
and more �me looking into the medicine they are prescribed. Consumers are becoming more and more open to
alterna�ve methods of healing versus paying money to major pharmaceu�cals. About 30% of americans are using
alterna�ve medicine (“Complementary, Alterna�ve, or Integra�ve Health: What’s In a Name?”, 2017)).
4. Threat of Suppliers: GSK supplied over 28,000 products in 2016(). The pharmaceu�cal industry relies heavily
on its suppliers. GSK needs all its suppliers to maintain top quality service and regula�ons throughout the whole
process. If any one of the suppliers fails in the process, GSK could risk poor quality products. This goes for rest of
the industry as well. All major companies acknowledge that with the constant contact of social media, a fault in the
process whether it be through the suppliers side or the company side could lead to major nega�ve effects.
5. Threat of Buyers: GSK is like almost every other pharmaceu�cal companies and spends most of its �me
researching and developing. The threat of new buyers in the industry is very slim. In May 2017, it was ranked
number 61 in top mul�na�onal performers not just pharmaceu�cals by Forbes magazine . It made over $99 billion
dollars(“Top Mul�na�onal Performers”, 2017). A company with that amount of funds at its availability, ensures that
their will be no issues with keeping up technology or no lack of fresh ideas. There is no threat of buyers for GSK or
any powerhouses in the pharmaceu�cal industry.
References:
Complementary, Alterna�ve, or Integra�ve Health: What’s In a Name?. (2017). NCCIH. Retrieved 18 January 2018,
from h�ps://nccih.nih.gov/health/integra�ve‐health
GLAXOSMITHKLINE PLC. Hoovers.com. Retrieved 19 January 2018, from h�p://www.hoovers.com/company‐
informa�on/cs/compe��on.glaxosmithkline_plc.dbf326e1c925a8b5.html
Top Mul�na�onal Performers. (2017). Forbes.com. Retrieved 19 January 2018, from
h�ps://www.forbes.com/companies/glaxosmithkline/
https://nccih.nih.gov/health/integrative-health
http://www.hoovers.com/company-information/cs/competition.glaxosmithkline_plc.dbf326e1c925a8b5.html
https://www.forbes.com/companies/glaxosmithkline/
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Last post yesterday at 11:28 PM by
Valerie Siebold
Learning Ac�vity#2: Gordon
Caitlyn Gordon posted Jan 18, 2018 7:51 PM Subscribe
1. Only studying the limita�ons for one selected industry or company is very one sided. There are
always external forces outside the industry or company environment. An example of this would
solely studying the pharmaceu�cal industry and not thinking the current economic or financial
environment. Consumers might be not be able to afford the newest and great research for the top
product. Furthermore, studying one industry or company excludes the importance of following what
external regula�ons (laws) are being dropped or created (Essays,November 2013).
2. Porters five compe��ve forces is extremely good at analyzing a whole industry. It can break down an
industry very efficiently and look at the short‐term goals of that par�cular industry. However it can
not plan or expect long‐term goals. It does not breakdown the finiacials or weakness of a par�cular
industry like SWOT analysis (Bea�e, 2016).
3. I would use SWOT analysis or the EFE Matrix to iden�fy the addi�onal external factors that were
excluded previously. EFE matrix looks the social, economic, poli�cal, and legal factors. It is based a
weight system and it assess the current business condi�ons compared to the external factors (“EFE
Matrix (External Factor Evalua�on)”, 2017) .
Resources
Bea�e, A. (2016). The Pi�alls of Porter’s 5 Forces. Investopedia. Retrieved 19 January 2018, from
h�ps://www.investopedia.com/ar�cles/inves�ng/103116/pi�alls‐porters‐5‐forces.asp
EFE Matrix (External Factor Evalua�on). (2017). Maxi‐pedia.com. Retrieved 19 January 2018, from
h�p://www.maxi‐pedia.com/EFE+matrix+external
Essays, UK. (November 2013). Limita�ons Of Porters Five Forces Economics Essay. Retrieved from
h�ps://www.ukessays.com/essays/economics/limita�ons‐of‐porters‐five‐forces‐economics‐essay.php?
cref=1
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Learning Ac�vity 2
Danielle Hardy posted Jan 15, 2018 6:09 PM Subscribe
1.
What do you believe is a limita�on to only evalua�ng those compe��ve forces for that selected
industry/company?
With all the research and development that is being conducted, the pharmaceu�cal market is constantly
changing. New medicines are being developed and tested everyday. These can cause dras�c changes in the
market and the economy for the companies in this industry. Porter’s 5 forces is only applicable at the point
of analysis. To stay up to date with the newest trends, the analysis would have to be conducted rou�nely,
which is �me consuming.
2. What are some of the implica�ons that are not considered when the strategic planners only u�lize
Porter’s 5 Compe��ve Forces?
Strategic planning requires insight into the future based on current trends (Strategic Management, 2014).
Porter’s 5 forces does not specifically ask the user to analyze future trends, but it can surely be used in that
manner.
3. How might you iden�fy those addi�onal external factors that had been previously excluded in your
Learning Ac�vity 1 when you applied only Porter’s 5 Compe��ve Forces?
It is possible to conduct Porter’s analysis, then take it a step forward. Each analysis has the capability to be
further analyzed. For example, instead of just iden�fying threats of new compe�tors, someone can iden�fy
the result of those new entrants.
References:
Strategic Management. (2014). Leading strategically. Washington, D.C.: The Saylor
Founda�on.
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Last post Thu at 8:31 PM by
Mercidieu Delva
Learning Ac�vity 1
Danielle Hardy posted Jan 15, 2018 6:09 PM Subscribe
Macure Pharma is a privately‐owned company that operates in Northern Europe. The business structure
and network of the company is small and flexible. The company focuses on specializa�on of par�cular
drugs, which is common in the Danish pharmaceu�cal market (Macure Pharma, n.d.). This is an aspect that
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can increase the bargaining power of suppliers, because these companies need specific ingredients to
manufacture their drugs (Legisla�ve Council
Secretariat, 2014).
Macure Pharma faces constant threats of new entrants into the industry. The pharmaceu�cal industry in
Denmark is the 16th largest pharmaceu�cal market in Europe, drawing a large pool of investors. Fortunately
for companies that are already established, like Macure Pharma, entering the market costs a large sum of
money, mostly for Research and Development investments (Legisla�ve Council Secretariat, 2014).
Again, the industry is extremely popular so compe��on is intense. Pharmaceu�cals are one of the most
exported items out of Europe (Legisla�ve Council Secretariat, 2014). Fortunately for Macure Pharma, they
are a small and priva�zed company that can react to economic changes more efficiently than their
compe��on (Macure Pharma, n.d.).
Research and Development of pharmaceu�cals in Denmark is highly funded by the government, and there
are many opportuni�es for advancement. This opens up the gateway for new developments of stronger,
cheaper drugs (Legisla�ve Council Secretariat, 2014). These will become subs�tutes products for those that
are being specialized by Macure Pharma. On the other hand, the company has a strong reputa�on for the
highest quality drugs (Macure Pharma, n.d).
Lastly, consumers can possibly pose a threat Macure Pharma due to the previously men�oned. There is a
market of customers that are consistently trying to get the best bang for their buck, so they are likely to
choose the cheaper alterna�ve once it becomes available, a result of con�nuous R&D (Legisla�ve Council
Secretariat, 2014).
References:
Legisla�ve Council Secretariat (2014). “Pharmaceu�cal industry in Denmark.” Retrieved from
h�p://www.legco.gov.hk/research‐publica�ons/english/1314fsc47‐pharmaceu�cal‐industry‐in‐denmark‐
20140902‐e
Macure Pharma (n.d.). “About us.” Retrieved from h�p://www.macurepharma.com/about
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Last post January 16 at 12:29 PM
by Patricia Quinones
week 2 Learning Ac�vity 2 Darren Carroll
Darren Carroll posted Jan 18, 2018 10:06 PM Subscribe
Porter’s Five Forces is a great means of measuring risks and threats external to the company while staying
within the industry. Unfortunately, the markets do not merely operate within their own world, but in a
world, that is impacted by social, economic, poli�cal and legal policies and movements. This surfaces a
substan�al limita�on in Porter’s Five Forces. Porter’s Five Forces looks at threats and not opportuni�es. It is
http://www.legco.gov.hk/research-publications/english/1314fsc47-pharmaceutical-industry-in-denmark-20140902-e
http://www.macurepharma.com/about
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good to understand the threats, but it is just as good to see the opportuni�es as well and take advantage of
them. This is where a PESTEL analysis comes in.
The PESTEL analysis takes a broader view of the environment than does Porter’s Five Forces. PESTEL is an
anagram that stands for Poli�cal, Economic, Social, Technological, Environmental and Legal with a purpose
of iden�fying possible threats and opportuni�es in the poli�cal, economic, social, technological,
environmental and legal arenas through analysis and trends in each area. (Strategic Management, 2014,
Evalua�ng the external environment, p. 77 ). An organiza�on such as Abbo� Laboratories can analyze and
prepare for the compe��on, but if the government should decide to place new regulatory guidance
restric�ng trade, health reform or price freezing then Abbo� Laboratories could face unexpected setbacks
that could cause undue hardships to the stakeholders. Healthcare reform for example. In the UK, Germany
and the US, all countries in which Abbo� Laboratories operate, health care reform imposed by the
government and payers have been pushing for higher outcomes with lower procedural pricing, th
us
affec�ng the opera�ng margins within the organiza�on. (Illert and Emmerich, 2008, p. 24) Reforms such as
this would not have been considered with Porter’s Five Forces. But, the PESTEL analysis would iden�fy
these threats and expose opportuni�es as well, such as raising premiums to help offset be�er procedural
pricing. The PESTEL is another tool that should be used by organiza�ons to help size up the markets and the
environment.
References:
Illert, G., & Emmerich, R. (2008). Marke�ng Strategy: The need for new promo�onal models.
Journal of Medical Marke�ng, 8(1), 23‐30. doi:10.1057/palgrave.jmm.5050124
Strategic Management. (2014). Evalua�ng the external environment. Washington, D.C.: The Saylor
Founda�on
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Learning Ac�vity 1 Darren Carroll
Darren Carroll posted Jan 18, 2018 10:03 PM Subscribe
The company I have chosen is Abbo� Laboratories.
Abbo� Laboratories, headquartered in Abbo� Park, Illinois, competes within the pharmaceu�cal industry.
(Contact, 2018, p. 1) The organiza�on is among the larger manufactures with a presence in 150 countries
and 94,000 employees. (About us, 2018, p. 1) Abbo�’s compe��on for market share is very strong and
barriers to enter the pharmaceu�cal market are in some cases hard because of cost and government
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regula�on surrounding the pharmaceu�cal industry. But in other cases, such as generics, entry is very easy.
The Waxman‐Hatch Act in 1984 relieved generic drug producers from tes�ng prescrip�on medica�ons once
the patent expired. (Frank and Salker, 1997, p. 1) This eased a financial burden and made it easier to enter
the pharmaceu�cal industry, thus crea�ng another compe�tor and another threat; the threat of subs�tu�on
‐ generics for brand names. This, of course, is not restricted to the US market but other developed markets
as well, such as the Japanese markets. (Iizuka, 2009, p. 65) To maintain acceptable margins the
manufactures of brand‐name drugs are forced to increase prices. (Frank and Salker, 1997, P. 89). Abbo�
Laboratories has gone a step more and began producing generics as well. (2016 annual report, 2017, p. 5)
The compe��on rivalry and buyers in globally developed markets are strong. This combined with higher
R&D cost and health care reforms demanding lower prices with be�er outcomes is changing how Abbot
must operate. Forces such as this are lowering profit margins and forcing a change in strategy to maintain
market posi�on. (Illert and Emmerich, 2008, p. 24‐27) To change the direc�on of the company, Abbo� has
commi�ed to the following change in strategy:
Crea�ng more sales teams to keep the product in view of the buyers and payers.
Shi�ing focus on under developed markets verses developed markets.
Development and innova�on.
Removing programs that they are not in a leader posi�on, such as Abbo� Medical Op�cs. (2016
annual report, 2017, p. 2 ‐ 3).
As a global leader in the pharmaceu�cal in the industry, (2016 annual report, 2017, p. 3) Abbo�
Laboratories has access to mul�ple suppliers which decreases the supplier’s ability to nego�ate for higher
prices. Abbo� Laboratories have no apparent threat from suppliers.
References
2016 annual report. (2017). Retrieved Jan 16, 2018, from h�p://www.abbo�nvestor.com/phoenix.zhtml?
c=94004&p=irol‐proxy
About us. (2018). Retrieved Jan/16, 2018, from h�p://www.abbo�.com/about‐abbo�/at‐a‐glance.html
Contact. (2018). Retrieved Jan/16, 2018, from h�p://www.abbo�.com/contact.html
Frank, R. G. (. 1. )., & Salkever, D. S. (. 2. ). (1997). Generic entry and the pricing of pharmaceu�cals. Journal
of Economics and Management Strategy, 6(1), 75‐90. doi:10.1162/105864097567039
Iizuka, T. (2009). Generic entry in a regulated pharmaceu�cal market. Japanese Economic Review, 60(1), 63‐
81. doi:10.1111/j.1468‐5876.2008.00465.x
Illert, G., & Emmerich, R. (2008). Marke�ng strategy: The need for new promo�onal models. Journal of
Medical Marke�ng, 8(1), 23‐30. doi:10.1057/palgrave.jmm.5050124
http://www.abbottinvestor.com/phoenix.zhtml?c=94004&p=irol-proxy
http://www.abbott.com/about-abbott/at-a-glance.html
http://www.abbott.com/contact.html
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Week 2 ‐ Learning Ac�vity 2 ‐ Stevens
Donna Stevens posted Jan 18, 2018 7:53 PM Subscribe
RESPONSE TO QUESTIONS
1. What do you believe is the limita�on to only evalua�ng those compe��ve forces for that selected
industry/company?
Answer: I think the limita�on to only evalua�ng those compe��ve forces may pose a risk to the
ability to fully understand the company’s profit poten�al. One should take into account other key
factors that drive a company’s profit poten�al, such as the capabili�es and performance of the
company. Cri�cal success factors of profitability beyond the 5 compe��ve forces include product
quality, price compe��veness, and financial posi�on (revenue). As well, have strong leaders who
understand how to best manage the company is important. (Academy of Strategic Management
Journal. 12(2), p. 10‐11) GE has been in business since 1892, and has a proven track record of
leadership that has kept the business profitable.
2. What are some of the implica�ons that are NOT considered when the strategic planners only u�lize
Porter’s 5 Compe��ve Forces?
Answer: Some of the implica�ons that are not considered include when a company wins business
away from a compe�tor or when a company partners with a compe�tor, each in an effort to gain
more of the market share and increase its profits. These are just two business prac�ces that are not
accounted for in the 5 compe��ve forces. Overlooked is also the fact that companies can also be
collabora�ve with suppliers in ventures that benefit them both. (Strategic Management, 2014,
Evalua�ng the External Environment, p. 96‐97) GE has taken steps to build strong rela�onships
with its suppliers, as indicated by the various means of open communica�on (i.e. supplier portals,
readily available informa�on for suppliers, etc.). (General Electric, Renewable Energy: Suppliers, n.d.)
3. How might you iden�fy those addi�onal external factors that had been previously excluded in your
Learning Ac�vity 1 when you applied only Porter’s 5 Compe��ve Forces?
Answer: You can iden�fy many of the addi�onal external factors previously excluded by u�lizing the
Internal‐External (I‐E) matrix, used to compare the revenue of a company’s divisions. Using the
Financial Compe��ve Profile Matrix (FCPM) allows you to evaluate opera�ons, including marke�ng,
finance, human resources, informa�on technology, and research and development. (Capps & Cassidy,
2016, p. 13) As well, you can use the External Compe��ve Profile Matrix (ECPM). When used with
valid data, this method provide a “sharper strategic picture”. (Capps & Cassidy, 2016, p. 10‐11)
References:
Capps, C. J., & Cassidy, C. M. (2016). Expanding the compe��ve profile matrix (CPM): Introducing the
financial compe��ve profile matrix. Academy of Strategic Management Journal, 12(2), 10‐13. Retrieved
from h�ps://learn.umuc.edu/content/enforced/227040‐001153‐01‐2175‐OL3‐
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General Electric. (n.d.). Renewable Energy: Suppliers. Retrieved from
h�ps://www.gerenewableenergy.com/suppliers
Strategic Management. (2014). Evalua�ng the external environment. Washington, D.C.: The Saylor
Founda�on.
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Week 2 ‐ Learning Ac�vity 1 ‐ Stevens
Donna Stevens posted Jan 18, 2018 7:52 PM Subscribe
WIND MILL/WIND TURBINE INDUSTRY – GENERAL ELECTRIC
General Electric was selected for evalua�on as a representa�ve of the wind mill/wind turbine industry in
North America. GE was established in 1892 as a merger between U.S. companies owned by Thomas Edison
(Edison General Electric Company) and Charles Coffin (Thomson‐Houston Company). (General Electric [GE],
n.d.‐a, para. 4). The company is now headquartered in Boston. (GE, n.d.‐e)
Porter’s five compe��ve forces are: new entrants, buyers, suppliers, subs�tutes, and rivalry. (Strategic
Management, 2014, p. 88) The interac�ons of these forces are analyzed to determine the company’s
profitability. If there are no compe��ve forces working against each other, then the poten�al for profit is
high. The poten�al for profit weakens as any of the five forces begin to work against each other. (Strategic
Management, 2014, p. 88‐89)
Rivalry: GE is mildly affected by rivalry, as there are a handful of other global companies in the wind turbine
industry. Since its incep�on in 1892, GE has become “one of the world’s leading wind turbine suppliers”.
(GE, n.d.‐c, para. 1).Rivalry is likely between compe�tors when the growth rate of industry demand is low,
and there are less new customers. It is also likely when industry cost are high or there are less dis�nc�ons
between compe�tors. (Strategic Management, 2014, p. 89) More and more customers are looking for
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renewable energy. With the costs of wind turbine electricity reducing over the years, it is likely that there
will be an increase in demand in this industry. (GE Reports, 2017)
New Entrants: In order to enter the industry, and compete with GE, a company would have to be of
substan�al size and wealth. The pool of poten�al new entrants is likely to remain low because GE owns
over 48,000 ac�ve patents throughout the world. (GE, n.d.‐b, para. 1). Cost and technology would be
poten�al barriers for new entrants into this industry. (Porter, n.d.).
Buyers: Lenders perform a compe��ve analysis to determine the sustainability of a business. Likewise,
lenders understand that if a business is making a lot of profit, the buyer can insist on be�er prices, thus
decreasing the company’s profits, and decreasing cash flow to pay back loans. (Soundcloud, 2016). To
remain compe��ve in the industry and con�nue to a�ract new customers, GE prac�ces con�nuous
innova�on, such as changes to the design of their turbines. (GE Reports, 2017).
Suppliers: GE is “one of the world’s leading wind turbine suppliers”. (GE, n.d.‐c, para. 1). GE uses suppliers
to purchase parts, transporta�on management/logis�cs, (Suppliers, n.d.) Between a company and its
suppliers, whomever has more leverage over the other, has more power to influence profits. (Strategic
Management, 2014, p. 93). Although it is unclear whether GE has more leverage over its suppliers, the
company appears to go to great lengths to ensure open communica�on and good Supplier Management is
prac�ced, by their established supplier portal, and encouraged informa�on exchange. (GE, n.d.‐d., para. 3)
Subs�tu�ons: The cost of changing from tradi�onal grid electricity to wind turbine electricity plays a role in
the profitability of GE. If wind turbine electricity from GE can easily be subs�tuted, then “it is a threat to
the company”. (Porter, M (n.d.). The costs of wind turbine electricity has fallen by half over the past 10
years. To ensure even lower costs in the future, GE plans to increase the size of their turbine blades.
Increasing the size allows them to provide more power simultaneously. As well, new turbines are lighter and
more efficient. (GE Reports, 2017) Through constant innova�on, GE ac�vely works to reduce the demand
for subs�tu�on.
Strategic planning prac�ces at GE were affected by changes in the structure and strategy of the company’s
business units. Rivalry, or exis�ng compe�tors affects GE’s strategic planning process. Long range planning
was adopted to plan for sales growth and manufacturing expansion. (Ocasio & Joseph, 2008, p.249‐251).
References:
General Electric. (n.d.‐a). Thomas Edison & the History of Electricity. Retrieved from
h�ps://www.ge.com/about‐us/history/thomas‐edison
General Electric. (n.d.‐b). Licensing. Retrieved from h�ps://www.ge.com/?search=patents
General Electric. (n.d.‐c). Wind Energy Solu�ons: The next chapter in wind energy. Retrieved from
h�ps://www.gerenewableenergy.com/wind‐energy
General Electric. (n.d.‐d). Renewable Energy: Suppliers. Retrieved from
h�ps://www.gerenewableenergy.com/suppliers
General Electric. (n.d.‐e). Contact Us. Retrieved from h�ps://www.ge.com/?search=headquarters
GE Reports. (2017, September 12). Size Ma�ers: The next big thing in wind turbines. Retrieved from
h�ps://www.ge.com/reports/size‐ma�ers‐next‐big‐thing‐wind‐turbines/
Ocasio, W., & Joseph, J. (2008). Rise and fall or transforma�on? The Cra�s of Strategy, Long Range
Planning, 41(3):248‐272.
https://www.ge.com/about-us/history/thomas-edison
https://www.ge.com/?search=patents
https://www.gerenewableenergy.com/wind-energy
https://www.gerenewableenergy.com/suppliers
https://www.ge.com/?search=headquarters
https://www.ge.com/reports/size-matters-next-big-thing-wind-turbines/
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doi: 10.1016/j.lrp.2008.02.010
Porter, M (n.d.). Five forces model. Maxi‐Pedia. Retrieved from h�p://www.maxi‐
pedia.com/Five+Forces+model+by+Michael+Porter
Soundcloud. (2016). Using Porter’s Five Forces Model. BusinessBankingCoach.com. (2016). [Video]
Retrieved from h�ps://soundcloud.com/businessbankingcoach/using‐porters‐five‐forces‐model
Strategic Management. (2014). Evalua�ng the external environment. Washington, D.C.: The Saylor
Founda�on.
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LA 2
Doriane Pierre posted Jan 18, 2018 8:43 PM Subscribe
What do you believe is a limita�on to only evalua�ng those compe��ve forces for that selected
industry/company?
1. The previous observa�ons about Porter’s compe��ve forces are correct. The market and other
condi�ons have undergone several changes since the crea�on of this theory. From changes in
technology to changes in other aspects, market structure has evolved dras�cally and is not sta�c. At
the �me of this theory market was sta�c, and the pace of change was not as rapid as it is presently.
http://www.maxi-pedia.com/Five+Forces+model+by+Michael+Porter
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2. This theory does not consider non‐market forces. The organiza�on should take care of legisla�ons,
corporate ethics and its responsibili�es towards society which is nevertheless very important.
However, reference to this model can educate the organiza�on about the market structure and could
help to make an excellent research to ar�culate the strategy of any industry (Lambert, 1998, p.10).
Hence despite its limited applicability in present situa�ons, this model cannot be neglected either.
3. Supplier Power
The container industry is dominated by suppliers as it is subject to external environment regula�ons. The
price of fuel for instance, depends on the market.
Buyer Power
The extent to which Hamburg Sud Group charges a cargo or shipping depends on the route (where the
product will be delivered). Hence buyers have moderate to high bargaining power.
Threat of Subs�tutes
The company doesn’t have a lot of threats of subs�tutes as it was able to uphold a strong posi�on in the
market for a long �me.
Entry and Exit Barriers
The container industry is very costly and requires large capital. Not everyone can enter this industry.
Therefore, the entry is limited, and exit will cause losses.
Intensity of Compe��ve Rivalry
The container industry is a very compe��ve sector. However, Hamburg Sud is in 3rd place. Besides, all
those compe�tors depend on external environment and the market as well.
References
Lambert, M (1998). World container port traffic league. Containeriza�on Interna�onal Yearbook. pp 8‐12.
Retrieved from h�p:///www.t‐science.org/appdata/local
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LA 1
Doriane Pierre posted Jan 18, 2018 8:40 PM Subscribe
Iden�fy, discuss and analyze how each of the key drivers (that is, the Porter’s five driving forces) of
compe��on has affected the selected company in that industry based on the Porter’s Five Forces analysis
Hamburg Sud was originally founded in 1871 to help Hamburg merchants trade with Argen�na and Brazil.
The Head Quarter is in Hamburg, Germany. It’s now grown into one of the world’s largest private shipping
companies with 133 ships in its fleet, 5,360 employees, and a revenue of $6.9 billion USD.
It also owns Brazil’s Alianca which sails under the flag of Brazil. The company has won many awards and is
focusing on ways to reduce its environmental impact (Hamburg Sud Group, 2017, para 1).
1. Compe��ve Rivalry: looks at the number and strength of a company compe�tors (Porter, 2008, para.
5). Hamburg Sud group do have compe�tors such as Hapag‐Lloyd which headquarter is also located
in Germany. Beside providing great service t customers to a�ract them, the company also ensure
their data is secured. To retain its customers, Hamburg Sud group ensures whether cargo arrives on
�me, no damages, and is also classified in the top three container shipping companies for reliability.
2. Supplier Power: On one hand, this force determined how easy it is for suppliers to increase their
prices (Porter, 2008, para 6). On the other hand, suppliers can start a court ac�on against the
containers that try to leave the terminal and thus break the contract, therefore, Hamburg Sud Group
expects to respect the laws.
3. Buyer Power: Hamburg Sud Group also sold products online such as; hats, branding containers. With
the evolu�on of ecommerce, the company may have many customers who can influence the prices
based on how big their orders could be.
4. Threat of Subs�tu�on: is the likelihood for customers to find alterna�ve ways of doing what a
business could do. Fortunately, I don’t believe there will be any alterna�ves in using a cargo as
airplane cannot contain a lot of merchandise for instance.
5. Threat of New Entrants: a company can be affected if others enter the market. The container
shipping industry is very broad. With Hamburg being in the top three for several consecu�ve years, I
don’t believe the entrants will be a threat.
In my opinion, each container shipping company must develop a successful strategy which will provide
leadership over its compe�tors and will strengthen the posi�ons in its clients’ opinion. Due to the prominent
level of compe��on in the container industry, Hamburg Sud Group has held its posi�ons with the invaluable
experiences provided to its customers and the expansion of the range of services, as well as compliance and
well‐trained employees.
References
Hamburg Sud Group. (2017). Interna�onal Sipping Services. Retrieved from h�ps ://www.hamburgsud‐
line.com/liner/en/liner_services/index.html
Porter, M.E. (2008). The Five Compe��ve Forces That Shape Strategy. Harvard business Review, January
2008. Retrieved from h�ps://www.mindtools.com/pages/ar�cle/newTMC_08.html
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Week2_Learning Ac�vity 2_Guthrie_BMGT495
Drew Guthrie posted Jan 19, 2018 12:18 AM Subscribe
Gree�ngs,
There are not many limita�ons to Porter’s Five Forces model as it is very robust. If properly u�lized, Porter’s
Five Forces model allows one to gain a deeper understanding of the interac�on among compe�tors in an
industry (Strategic Management, 2014). However, if I must think of a limita�on to Porter’s Five Forces
model given the task of evalua�ng the wind turbine industry, one would be that the engineers and scien�sts
required to develop the product can deeply affect the compe��veness in the industry.
The Five Forces model should open one’s a�en�on and allow them to accurately assess the industry they
are in. However, if one forgets that the objec�ve is to gain a deeper understanding by assessing their
specific industry, they may miss a key characteris�c of their industry which is unique to other industries. In
the Wind Turbine Industry, I believe that there is greater uncertainty in the subs�tute force. Iden�fying
subs�tutes is possible, but iden�fying the rate at which customers will choose their subs�tutes is more
difficult to predict. Two viewpoints should be taken to gain a greater understanding of the subs�tute force.
First, one would need to evaluate firms who offer subs�tute products and determine where their interests
lie. There are different applica�ons of wind turbines. The differences primarily lie in the end‐user and the
scale of their needs. For instance, some firms may produce and sale primarily to Government applica�ons
while another firm sales primarily to small organiza�ons. Knowing the compe�tors in the industry, and the
likely targets of subs�tutes will give the best understanding of the industry.
Best regards,
Drew
References
Strategic Management. (2014). Evalua�ng the External Environment. Washington, D.C.: The Saylor
Founda�on
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Week2_Learning Ac�vity 1_Guthrie_BMGT495
Drew Guthrie posted Jan 19, 2018 12:18 AM Subscribe
Gree�ngs,
Company selected is Northern Power Systems
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Learning Ac�vity 2
Eduard Lungu posted Jan 18, 2018 7:21 PM Subscribe
A limita�on in regard to only evalua�ng Porter’s five compe��ve forces is not taking into account
technological advances and globaliza�on of industries (Symes, N.D.). Porters five compe��ve forces do not
consider the technological advances and increased compe��on from the interna�onal market. Implica�ons
that are not considered in Porters 5 5 compe��ve forces is crea�ng new markets instead of selec�ng from
the exis�ng ones. For example, Maersk is not just concentrated on the transporta�on of shipping
containers, rather they are diversified and also focus on rigs and drilling for natural gas and oil as well as
opera�ng container ports (Explore the Stories of A.P. Moller‐ Maersk, N.D.). By simply focusing on Porters
five compe��ve forces, it would be overlooked how important diversifica�on is in today’s global business
environment.
The way to iden�fy these addi�onal factors be to consider how the world has changed since Porters five
compe��ve forces and no�cing the importance of emerging interna�onal compe�tors and how
globaliza�on as well as new laws influence a company’s business. The environment is also changing the way
business is being conducted with more environmental regula�ons by governments as well as permit
requirements to do day to day opera�ons on drilling for natural gases (Jeanty, N.D.).
In conclusion, Porter’s five compe��ve forces are important however, it is equally important to consider
globaliza�on, diversifica�on and government regula�ons affect business. Companies have to consider the
risk’s and implica�ons of not following another country’s regula�ons. Big companies such as Moller‐Maersk
Group have several opera�ons besides shipping containers and have to focus on a large‐scale business
model to stay profitable. Not considering these extra factors can hurt a business in today’s markets and is a
limi�ng factor of Porters five compe��ve forces.
References:
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Symes, S. (N.D.). The Limita�ons of Various Strategy‐Formula�on Analy�cal Techniques. Retrieved from
h�p://smallbusiness.chron.com/limita�ons‐various‐strategyformula�on‐analy�cal‐techniques‐21171.html
Explore the Stories of A.P. Moller‐ Maersk. (N.D.). Retrieved from h�ps://www.maersk.com/explore
Jeanty, J. (N.D.). Natural Environmental Factors That Affect Business. Retrieved from
h�p://smallbusiness.chron.com/natural‐environmental‐factors‐affect‐business‐13235.html
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Last post Thu at 8:34 PM by
Mercidieu Delva
Learning ac�vity 1
Eduard Lungu posted Jan 18, 2018 6:01 PM Subscribe
For this week’s learning ac�vity, I decided to choose Maersk Line as the company I want to discuss. Maersk
Line is the biggest container shipping company in the world headquartered in Copenhagen, Denmark.
Maersk Line belongs to A.P. Maersk Group with over 108,000 employees in 135 countries worldwide
(Madar, A. & Neascu, N., 2016). In comparison with its compe��on it holds over 15.2 percent of the market
share with the Mediterranean Shipping Company headquartered in Italy being the closest second and fierce
rival with 12.9 percent of the market share with a total of ten shipping companies domina�ng over 60
percent of the market (Zsolt Katona & Miklos Sarvary, 2014).
The container shipping industry is unforgiving for new entrants to the market because of the rivalry, global
reach of established container shipping companies like Maersk Line and their buying power. Between the
top ten rivals in the industry, compe��on is aggressive and Maersk Line emphasizes its key advantages of
reliability, simplicity and environment focused approach (Zsolt Katona & Miklos Sarvary, 2014). Quality is
very important for costumers and is a key driving force behind Maersk Line’s con�nued success in the
industry. The average age of containers is less than 7 years giving Maersk Line an advantage over its
compe�tors in its excellent high quality of equipment (Madar, A. & Neascu, N., 2016).
In conclusion, the container shipping industry is very compe��ve and unforgiving to new entrants because
of the market share that is already owned by the top 10 shipping companies as well as their bargaining
power and monopoly over supplies. Maersk Line and its rivals compete very hard to stay on top however
not many can match Maersk Line’s focus in quality and customer sa�sfac�on with their use of the best and
newest equipment to transport goods safely across the oceans.
References:
Zsolt Katona, a., & Miklos Sarvary, a. (2014). Maersk Line: B2B Social Media— “It’s Communica�on, Not
Marke�ng”. California Management Review, (3), 142. doi:10.1525/cmr.2013.56.3.142
http://smallbusiness.chron.com/limitations-various-strategyformulation-analytical-techniques-21171.html
https://www.maersk.com/explore
http://smallbusiness.chron.com/natural-environmental-factors-affect-business-13235.html
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Madar, A., & Neascu, N. A. (2016). Quality management in shipping. Case study: Maersk Line Denmark.
Bulle�n of the Transilvania University of Brasov. Series V: Economic Sciences, 9(1), 139‐148.
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Last post Thu at 6:26 PM by Jared
Ubben
Week 2 Learning Ac�vity 1 ‐ Beltre
Euriviades Beltre posted Jan 17, 2018 9:20 AM Subscribe
I chose Suzlon wind mill corpora�on. Suzlon established its North American opera�ons, Suzlon Wind Energy
Corpora�on (SWECO) in 2001 with a vision to become the preferred provider of value‐added sustainable
power plant solu�ons (Suzlon, n.d.).
Rivalry among exis�ng compe�tors
Compe�tors possess bigger fiscal and promo�on resources, and are more diversified. Strategic coali�on
involving Northern Power Systems, Bantrel, Conergy AG, Ref‐Chem, L.P., and Peoples Steel Mills Ltd in the
areas of product development, design, engineering, and manufacturing of windmills strengthened both
companies’ global windmill and wind turbine business.
The bargaining power of suppliers
Steel, fundamental electrical, and the delivery of finished products are the main tasks that the company
seeks from suppliers and it has a wide span of suppliers such that if one supplier increases prices. Suzlon
can switch to another supplier without produc�on problems.
Threat of new entrants to the market
Entry barrier is very high in this segment. It needs a lot of capital investment since the industry is on a
maturity stage with four main compe�tors. The economies of scale are minimal in this sec�on and there are
small scale producers, who make the custom‐made windmills. The amount of their produc�on is not a threat
for Suzlon. However, they can increase the interest of their products among the public.
The bargaining power of buyers
Suzlon’s consumers are individual customers, thus they can seriously affect the company’s financial posi�on.
The number of dealers around the world are not many, thus Suzlon is dependent on the individual
customers, who cannot affect the financial posi�on.
Threat of subs�tute products/services
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Suzlon’s windmills is only a few close subs�tutes for windmills could seriously affect the market. Wind
turbines are the main subs�tutes of windmills.
Reference:
Suzlon. (n.d.). About Suzlon. Retrieved from h�p://www.suzlon.com/about/company
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Last post Thu at 7:45 PM by
Mercidieu Delva
Week 2 Learning Ac�vity 2 ‐ Beltre
Euriviades Beltre posted Jan 17, 2018 9:39 AM Subscribe
1. What do you believe is a limita�on to only evalua�ng those compe��ve forces for that selected
industry/company?
Well, there will be limita�on in compe��ve force if it assumes all factors are compe��ve in nature. In
business, there are joint ventures that occur all the �me. For example, in the food industry manufacturers
can work with more than one compe�ng business, and supply two or more different rivals at the same �me.
The same is true on the supply chain side of manufacturing. Two different manufacturers might acquire
materials for produc�on from the same source.
2. What are some of the implica�ons that are NOT considered when the strategic planners only u�lize
Porter’s 5 Compe��ve Forces?
Even if a Suzlon sells to the single industry, sec�ons normally are present in just that industry that physical
exercise much less power in comparison with others. For instance, this subs�tu�on industry for many
solu�ons is usually much less price tag delicate in comparison with the overall market. In general, a Windmill
can sell to potent consumers while s�ll being leave using above‐average produc�vity only should it be a
new low‐cost maker in its industry or if its product or service loves quite a few uncommon, otherwise
dis�nc�ve, features.
3. How might you iden�fy those addi�onal external factors that had been previously excluded in your
Learning Ac�vity 1 when you applied only Porter’s 5 Compe��ve Forces?
I think the external factors is compe��veness in an industry is grounded in their underlying immediate and
ongoing expenses, and compe��ve causes are present built properly a�er dark set up combatants in an
individual industry. Buyers, distributors, possibili�es entrants, and alterna�ve items are many opponents
which can be pre�y much popular or maybe energe�c according to the industry.
4. Support the ra�onale for your explana�on.
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No ma�er what its joint strength, the Suzlon’s aim is to locate posture in the industry where the companies
windmill best protect itself next to most of these causes or maybe is going to influence these people in their
favor. The joint strength on the causes can be painfully visible to everyone. These people, your strategist
need to search beneath the exterior and analyze sources of each.
Reference:
Suzlon. (n.d.). About Suzlon. Retrieved from h�p://www.suzlon.com/about/company
The five compe��ve forces that shape strategy: An interview with Michael E. Porter, Professor Harvard
University (1996). [Video] Harvard Business Publishing. Retrieved from h�ps://www.youtube.com/watch?
v=mYF2_FBCvXw
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LA 1 Rodriguez
Ginna Rodriguez posted Jan 15, 2018 7:04 PM Subscribe
I chose AstraZeneca as the company from the pharmaceu�cal industry that I would focus on. As describe by
Porter the
“Porter’s Five Forces model is made up by iden�fica�on of 5 fundamental compe��ve forces:
•Barriers to entry
•Threat of subs�tutes
•Bargaining power of buyers
•Bargaining power of suppliers
•Rivalry among the exis�ng players”(Maxi‐Pedia, 2017, Five Forces Model)
Here is are the five forces model for AstraZeneca. The main force to consider for AstraZeneca is
compe�tors and bargaining power of buyers.
•Barriers to entry The pharmaceu�cal industry is highly regulated and
costs a significant amount of money to enter as well
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as obtaining specialized knowledge from scien�st
•Threat of subs�tutes Pharmaceu�cal drugs are patented and for many
years cannot be produced in generic from. But, there
are always other companies trying to come up with
new pharmaceu�cals to solve medical problems that
could create a subs�tute for AstraZeneca’s drug
•Bargaining power of buyers The individual buyers do not have significant buying
power. Larger socialist governments that have
universal healthcare may have significant buying
power to reduce costs. Also, large health insurance
companies may have increased buying power.
•Bargaining power of suppliers Suppliers have limi�ng bargaining power because
there are many suppliers for the raw materials and
o�en a pharmaceu�cal company will manufacture
their own pharmaceu�cals.
•Rivalry among the exis�ng
players
The largest threat is from rivalry companies in the
pharmaceu�cal industry who ac�vely market to
Doctors and try to be first to market to gain market
share
References
Porter, M. (2017). Five Forces Model. Maxi‐Pedia. Retrieved from h�p://www.maxi‐
pedia.com/Five+Forces+model+by+Michael+Porter
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Valerie Siebold
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LA 2 Rodriguez
Ginna Rodriguez posted Jan 15, 2018 7:05 PM Subscribe
AstraZeneca is the company that I chose for this class. In the case of a pharmaceu�cal company one large
force is the government and societal change regarding universal healthcare as well as possible regulatory
changes that could nega�vely affect profit margins. The Five forces model as stated in our textbook
considers “To do so, five forces analysis considers the interac�ons among the compe�tors in an industry,
poten�al new entrants to the industry, subs�tutes for the industry’s offerings, suppliers to the industry, and
the industry’s buyers.” (Strategic Management, 2014, Evalua�ng External Environments, p. 88‐89) But it
does not consider regulatory factors. In a highly regulated industry this as well as government pressures for
na�onaliza�on of healthcare could have profound effects on the healthcare industry, including
pharmaceu�cal companies.
The other factor that could have major implica�ons for AstraZeneca is the Legal changes. Many
pharmaceu�cal companies have been sued for large amounts due to drugs having adverse side effects or
causing deaths. If there was a change in the legal structure or significant law suits this could limit the capital
that AstraZeneca has to do research and development.
When using PESTEL to look at the general macro‐economic environment, as stated in our textbook “In
par�cular, PESTEL reflects the names of the six segments of the general environment: (1) poli�cal, (2)
economic, (3) social, (4) technological, (5) environmental, and (6) legal.”(Strategic Management, 2014,
Evalua�ng External Environments, p. 77), you would see that both legal and poli�cal element can have a
significant impact on a business.
References
Strategic Management. (2014). Evalua�ng External Environments. Washington, D.C.: The Saylor
Founda�on
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Week 2 ‐ LA1 ‐ Jared Ubben
Jared Ubben posted Jan 18, 2018 2:23 PM Subscribe
Company: GE Wind Turbines
Rivalry among exis�ng compe�tors:
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The two top compe�tors for GE’s wind turbines are Siemens and Vestas. The two compe�tors carry almost
iden�cal products as GE and thus have a high‐intensity of compe��veness. The two compe�tors have
forced GE to increase their product line from one wind turbine in 2002 to now carrying 9 models
(gerenewableenergy.com, 2018). Between GE and Siemens, GE is the only organiza�on that produces Tidal
Energy for turbines to be used in the oceans. This creates an advantage to GE by being the only producer of
wind turbines that can be used in the water. For these reasons, the rivalry amongst compe�tors is
moderate/high.
The bargaining power of suppliers:
With a name like GE doing the purchasing, the supplier does not have an upper‐hand in this transac�on.
There is a large supply of raw material companies to choose from to manufacture the turbines who all
compete to fill the needs of a small industry. For this reason, the bargaining power of suppliers is low.
Threat of new entrants to the market:
Going “green” is becoming a huge trend in the U.S. For example, I currently work for an organic shampoo
company and we have seen an increase in sales every month since I started with the company a year and a
half ago.
Wind turbines are a lucra�ve industry to be in, but because of the high cost to enter the market, it is
difficult for new companies to enter as they’d be going up against mul�na�onal organiza�ons such as GE.
There is a great tech capacity needed for the products to properly operate and in the last 3 years GE has
been able to upgrade their turbines to be linked to devises such as smart phones and tablets to show real‐
�me data which improves performance (gerenewableenergy.com, 2018).
A global powerhouse like GE has a quality associated with its name and for this reason new entrants don’t
have a large impact on their company. Of course, like any industry, the pricing needs to be consistent with
other companies or else buyers will lean towards the less expensive op�on, disregarding the reputa�on
behind GE. For these reasons the threat of new entrants is low/
moderate.
The bargaining power of buyers:
With a limited number of compe�tors in the wind turbine market, the bargaining power of buyers plays only
a small role for GE. The main buyers are government agencies and large energy providers. The government
could have some play in their bargaining power as certain government departments set the
rules/regula�ons that wind turbine companies must follow. For this reason, the bargaining power of buyer is
moderate.
Threat of subs�tute products/services:
The are other subs�tutes to wind turbines that can harness the energy the world around us provides.
Subs�tutes include solar energy, hydro and geothermal. None of the subs�tutes listed can be used to
replace a wind turbine as they u�lize other natural forces. Because of this they do not pose a threat to the
wind turbine industry or the GE’s line of wind turbines.
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The other obvious subs�tute to wind energy is fossil fuels. Fossil fuels have a large co‐dependency with the
government and vice‐versa. That makes it all the more important for the wind turbine industry to offer
affordable and well‐manufactured products to turn people on to the new, clean technologies they provide.
For this reason, the threat of subs�tutes in high due to the current dependency of fossil fuels.
Support with detailed explana�ons how the above‐men�oned external compe��ve forces are affec�ng
the business environment of the industry in general, and the selected company in par�cular on the overall
strategic planning processes that are unique to that industry in general and that company in par�cular.
In general, in the wind turbine industry, the external forces have a high impact in the areas of rivalry
amongst compe�tors and threat of subs�tutes. This is specifically causing GE to pay a�en�on to their
closest compe�tor’s products and prices. They are staying comparable in price to their closest compe�tor
Siemens and offering certain product Siemens doesn’t carry.
The strategic planning process for GE must not only look at the direct compe�tors like Vestas and Siemens
but also focus on the other 4 factors of buyers, suppliers, subs�tutes and new entrants.
By being constrained by suppliers and the amount they charge for certain products/services will “cap” the
profits available while the constraint of the power of buyers plays a role in this equa�on as well. The
planning process must factor both the highest cost they could be charged by supplies and how li�le they
could charge a buyer in order to formulate a prac�cal price for the turbines.
References:
Wind Turbines Overview. (2018). Retrieved January 16, 2018, from
h�ps://www.gerenewableenergy.com/wind‐energy/turbines
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Sanh Tran
Week 2 ‐ LA2 ‐ Jared Ubben
Jared Ubben posted Jan 18, 2018 2:24 PM Subscribe
Company: GE Wind Turbines
1. What do you believe is a limita�on to only evalua�ng those compe��ve forces for that selected
industry/company?
While Porter’s 5 factors are a great way to start to analyze the industry, compe�tors, suppliers and buyers,
there are more factors than just Porter’s 5 that impact a company or industry. By only looking at 5 drivers it
is limi�ng a company to only look at the close compe�tors. A company can take bits and pieces of
informa�on from other industries that are working well for them and apply the same concepts to their
company.
2. What are some of the implica�ons that are NOT considered when the strategic planners only u�lize
Porter’s 5 Compe��ve Forces?
The advancement of technology should be considered. In an industry like wind turbines, technology has
already helped improve performance and data analysis and will con�nue to have an impact on the industry.
The current poli�cal state of the country where the company operates should also be considered. Because
the president, senators, governors and mayors have a large impact in people’s everyday lives, they can
greatly affect what source of energy is used in their regions, states and ci�es. For example, Trump has
‘called for more fossil fuel drilling and fewer environmental regula�ons” (Davenport & Parker, 2016) crea�ng
less demand from governmental agencies for green energy plants like wind turbines.
Customer needs are important to consider. If products are being made that don’t fit the customer’s needs,
they will go un‐purchased. The new sector that GE has entered, ocean wind turbines, is se�ng them apart
from the compe��on. This was created because of higher wind speeds off the coasts and customer’s needs.
3. How might you iden�fy those addi�onal external factors that had been previously excluded in your
Learning Ac�vity 1 when you applied only Porter’s 5 Compe��ve Forces?
Technology could be looked at in the suppliers’ category of Porter’s 5 factors. If the technology is moving
forward but a supplier’s products are not adaptable to the new technology, GE must look to new suppliers
that support the current technology. As the technology advances, suppliers will need to keep up to date
with it and thus be able to charge more for the latest technology the industry has to offer.
In the wind turbine industry, when a large percentage of the buyers are governmental companies, it is
important to look at the current trends the government is making towards clean energy or if it’s going back
to using more fossil fuels.
By looking at the bargaining power of buyers, you can dig deeper into the ‘buyer’ category and uncover
what their needs are, not just the power they have over the company when purchasing their products.
References:
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Davenport, C & Parker, A. (2016, May 26). Donald Trump’s Energy Plan: More Fossil Fuels and Fewer Rules.
Retrieved January 18, 2018, from h�ps://www.ny�mes.com/2016/05/27/us/poli�cs/donald‐trump‐global‐
warming‐energy‐policy.html
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Learning Ac�vity‐1
O�
Jus�n O� posted Jan 18, 2018 4:00 AM Subscribe
A�er reviewing all the op�ons for companies to use for the next few weeks of Learning Ac�vi�es, I decided
to choose A.P. Moller‐ Maersk, which is an interna�onal shipping container industry based in Denmark
(Contact A.P. Moller‐Maersk, n.d.). In this Leaning Ac�vity, I will be iden�fying, discussing, and analyzing
how Porter’s five forces affect A.P. Moller‐ Maersk and the industry as a whole.
Force 1: Barriers to entry
A.P. Moller‐Maersk competes in an industry that has numerous barriers to entry. The industry is extremely
expensive to enter due to the cost of the ships, port slips, repairs, maintenance, etc. The last major ship
order by Maersk consisted of 10 ships that were to be built as the biggest shipping container ships in the
world. The 10 ships cost Maersk 1.9 Billion dollars in 2011 (Leach,2011).
Force 2:Threat of Subs�tute
For A.P. Moller‐Maersk, the threat of subs�tute is reduced by the fact that they are the industry leader both
in size and the amount of ships they operate (About A.P. Moller‐Maersk, n.d.). This gives them the ability to
have more ships available to the customer and reduce the cost to the consumer. If it weren’t for their
industry leader status then the threat of subs�tute would be a huge concern due to the shipping container
industry being very compe��ve.
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Force 3:Barganing Power of Buyer
The buyers in the shipping container industry have a fair amount of bargaining power. This is due to the fact
that the shipping industry is extremely compe��ve. The buyers also have bargaining power due to the need
for all ships to be full of containers to maximize profit.
Force 4: Bargaining Power of Suppliers
Due to size of most business in the shipping container industry, the suppliers do not have a lot of buying
power. This is because companies like Maersk are buying supplies such as fuel in such mass quan��es that a
contract to supply them would be highly sought a�er. Therefore suppliers have a limited amount of bargain
power within the industry.
Force 5:Rivalry among Exis�ng Companies
With A.P. Moller‐Maersk being the industry leader they have an advantage when it comes to the 5th force.
With that being said, the reality is that the compe��on is tough among the companies in the industry. This
compe��on means that it is not uncommon for a company to exit the industry thru a buy out by a
compe�tor.
References
About A.P. Moller‐Maersk. (n.d.). Retrieved January 17, 2018, from h�ps://www.maersk.com/about/contact‐
us
Contact A.P. Moller‐Maersk. (n.d.). Retrieved January 17, 2018, from
h�ps://www.maersk.com/about/contact‐us
Leach, P. T. (2011). BIG, BIGGER, BIGGEST. Journal Of Commerce (1542‐3867), 12(16), 12‐15.
Strategic Management (2014). Evalua�ng the external environment. Washington, D.C.: The Saylor
Founda�on.
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O�
Learning Ac�vity 2‐ O�
Jus�n O� posted Jan 18, 2018 4:01 AM Subscribe
I believe that using only the five compe��ve forces to evaluate the interna�onal container shipping industry
has some limita�ons. The interna�onal shipping container industry needs to cooperate in some areas to stay
in business or expand their reach. A great example of this is coopera�on in the container freight industry
among the major companies to allow the shipment of each others containers on the others ships. This
expands the market reach of all the companies involved while also reducing cost by crea�ng full shipments.
Porter’s five compe��ve forces though do not consider this possibility because it takes into considera�on
pure compe��on only (The Five Compe��ve Forces, 1996). By not taking into considera�ons implica�ons
such as coopera�on, it can make an industry appear to be a bad market to break into due to high amounts
of compe��on, when in reality it is a good one to get into because of the coopera�on. The five compe��ve
forces also don’t consider the possibility that a company can expand into another similar industry instead of
just compe�ng for a bigger piece of the current pie. A great example of this is Maerk’s expansion into the oil
tanker industry (About A.P. Moller‐Maersk, n.d.). Lastly, Porter’s five compe��ve forces does not take into
account external forces such as new government legisla�on or how badly an industry could be affected by
an economic depression. New government regula�ons on an industry such as the interna�onal shipping
container industry can quickly change the industry from being profitable into an industry that should be
exited.
References
About A.P. Moller‐Maersk. (n.d.). Retrieved January 17, 2018, from h�ps://www.maersk.com/about/contact‐
us
The five compe��ve forces that shape strategy (1996). [Video] Harvard Business Review. Retrieved from
h�ps://www.youtube.com/watch?v=mYF2_FBCvXw
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LA #2 Kim Roman
Kim Roman posted Jan 18, 2018 5:17 PM Subscribe
Limita�ons of the Five Forces Analysis
The Five Forces analysis can be very helpful in guiding compe�tors within an industry. However, Michael
Porter felt the profit poten�al within an industry was fixed and in order to make more money, one had to
simply take it from another. He didn’t believe in exploring alternate ways to increase profit poten�al and his
Five Forces Analysis does not men�on collabora�on. Instead, he felt all business rela�onships were always
adversarial and compe��ve by nature (Strategic Management, 2014, Evalua�ng External Environment, pp.
96‐97).
Many things can be overlooked, but collabora�on should not be one of them. Collabora�on can increase the
benefit for all par�es involved. GE is a firm believer in collabora�ve partnerships. Not only does it increase
profits and benefits both suppliers and buyers; it also helps lead the way to a more innova�ve future. All
companies should keep a look out for collabora�ve opportuni�es.
In 2013, GE partnered with EC&R (E.ON Climate and Renewables) and developed PowerUp. PowerUp is a
digital pla�orm that uses the internet to analyze tens of thousands data points on a wind farm each second
which leads to higher power output, increased produc�vity, and creates addi�onal revenue (GE Renewable
Energy, 2018, E.ON and GE: A Power Up Story, para. 2).
GE also introduced the WiSE Solu�on. This combined wind and solar energy into a wind turbine instead of
having customers runs wind and solar plants independently. This is proven to be innova�ve, be�er for the
customers, and cost effec�ve which in turn will generate more profit (GE Renewable Energy, 2018b, Red
Lake Falls‐ Wind integrated solar energy solu�on, para. 3‐4).
GE and LM Wind Power have a long‐standing partnership that has yielded many innova�ons and
commercial successes. This specific collabora�on offers higher performing, more produc�ve wind turbines,
while con�nuing to reduce the cost of energy and improve returns on their investments (GE Renewable
Energy, 2018d, LM Wind Power acquisi�on, para. 4).
GE and Apple also partnered up to bring GE’s so�ware pla�orm, Predix, to an iOS app, connec�ng machines
with embedded devices. This collabora�on is projected to add 15 trillion to the global GDP by 2030 (GE
Renewable Energy, 2017, GE And Apple Team Up To Bring The Industrial Internet To The iPhone and iOS).
GE Renewable Energy. (2017). GE And Apple Team Up To Bring The Industrial Internet To The iPhone and
iOS. Retrieved from h�ps://www.ge.com/reports/ge‐apple‐team‐bring‐industrial‐internet‐iphone‐ios/
GE Renewable Energy. (2018). E.ON and GE: A PowerUp Story. Retrieved from
h�ps://www.gerenewableenergy.com/stories/eon‐power‐up
GE Renewable Energy. (2018b). Red Lake Falls‐ Wind integrated solar energy solu�on. Retrieved from
h�ps://www.gerenewableenergy.com/stories/red‐lake‐falls
GE Renewable Energy. (2018d). LM Wind Power/Unleashing limitless Energy. Retrieved from
h�ps://www.gerenewableenergy.com/wind‐energy/lm‐wind‐power
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https://www.gerenewableenergy.com/stories/red-lake-falls
https://www.gerenewableenergy.com/wind-energy/lm-wind-power
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LA #1 Kim Roman
Kim Roman posted Jan 18, 2018 5:15 PM Subscribe
General Electric (GE) is one of the world’s leading companies in the Onshore Wind Business industry. Since
the incep�on of GE’s Onshore Wind business and with Pete McCabe as the President and CEO, GE
currently claims over 35,000 wind turbines globally (GE Renewable Energy, 2017, GE Renewable Energy hits
60 GW of global onshore wind installed capacity, para. 1‐2). GE has manufacturing plants in North America,
South America, Europe, and Asia with headquarter loca�ons in Europe and North America. The North
American headquarters in located in Schenectady, NY and employs approximately 4000 people (GE
Renewable Energy, 2018a, GE Renewable energy loca�ons, map).
Michael Porter’s Five Forces Analysis is an analy�cal tool used by businesses to help evaluate current
business sta�s�cs and strategies and focuses on ways to guide businesses in making innova�ve decisions to
mold future success within their industry (Strategic Management, 2014, Evalua�ng External Environment,
pp. 88‐89). There are five areas to evaluate to determine a company’s presence within an industry and the
following evalua�ons were made on GE Renewable Energy.
Rivalry among compe�tors
Understanding an industry and the compe�tors whom shape it, helps companies iden�fy strategies in an
effort to remain an integral, yet successful, compe�tor. When there are numerous compe�tors within a
par�cular industry that offer similar products and services, companies must develop methods to
differen�ate themselves from the rest of the industry when it comes to the consumers. By con�nuing to be
innova�ve with consumer products, making sure the quality offered matches the price requested, being
environmentally responsible, and always achieving top notch customer service are mul�ple ways to stand
above rival compe�tors (Strategic Management, 2014, Evalua�ng External Environment, p. 89).
GE Renewable Energy is one of the top compe�tors of its industry working alongside companies like Vestas,
Siemens, Suzlon, and Goldwind. Collec�vely, all five companies occupy 82.6% market share of the U.S. Wind
Power Fleet (American Wind Energy Associa�on, 2016, Wind Turbine Manufacturers, para. 2). All of these
companies offer similar services; however, GE and Vestas are the industry leaders. GE, in par�cular,
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con�nues to innovate its products to give themselves an advantage over its compe�tors. Offered as part of
GE’s expanded service agreements, the world’s first digital wind farm is now available. The digital wind farm
is a compila�on of GE’s newest hardware, modular turbine technology, and a so�ware pla�orm (Predix) all
of which is transformed into a digital infrastructure at your finger�ps. This allows wind farm operators to
op�mize maintenance strategies, improve reliability, and increase energy produc�on. This cloud based app
allows for be�er, faster, and more efficient decision making (GE Renewable Energy, 2018b, The world’s first
digital wind farm, para. 1‐2). This sets GE apart from its compe�tors.
Threat of poten�al new entrants
The threat of new entrants into an industry varies depending upon the specific industry. Companies need to
analyze the possibility of new entrants in their industry due to the fact new entrants reduce the profit
poten�al for all companies involved (Strategic Management, 2014, Evalua�ng External Environment, p. 91).
New entrants have many things to consider before entering into uncharted territory. Startup‐costs and
capital requirements are high, marke�ng and distribu�on channels are limited ini�ally, government policies
and regula�ons makes it difficult for new entrants, switching costs for customers are usually high
discouraging customers from leaving their exis�ng company, retalia�on from exis�ng compe�tors is likely,
and it is usually impossible for new entrants to match the prices and quality of exis�ng compe�tors ini�ally
as the exis�ng members have proven themselves over �me (Strategic Management, 2014, Evalua�ng
External Environment, p. 92).
GE is an enormous company with over 20,000 employees worldwide and enjoys a large, loyal customer
base. GE has been established as a leading compe�tor in its industry for over 125 years and offers a vast
array of services outside of wind energy. To top that off, a company like GE is a billion dollar start‐up
company and has compe�tors that are just as powerful as GE themselves (GE Renewable Energy, 2018c,
Unleashing Limitless Energy, para. 2,3,8). As a result, it is highly unlikely for GE to experience the threat of a
new entrant into the industry.
Threat of Subs�tutes
In analyzing threats in an industry, it is as equally important to consider the threat of subs�tutes. This
encompasses goods and services other companies, in or out of the industry in ques�on, offer which are
similar to the other compe�tors and can fill customers’ needs (Strategic Management, 2014, Evalua�ng
External Environment, p. 92).
There are a mul�tude of energy sources people can use besides wind energy such as solar energy, gas,
hydropower, coal, etc. Oil prices play a big part in gas prices and some may view this alterna�ve as cheaper
than wind power. Fortunately, GE also specializes in solar power, hydro power, and gas. While some
customers may not opt to use wind power, GE would not experience a significant decline in clientele. The
more the economy becomes concerned with the environment and the benefits of going green, it is less likely
consumers will choose alterna�ves to renewable resources.
Power of Suppliers
Suppliers are responsible for providing companies with the materials needed, which in turn are used to
create goods and services for consumers. The rela�onships between the compe�tors and suppliers directly
influences the profit poten�al of an industry (Strategic Management, 2014, Evalua�ng External
Environment, p. 93‐94). It is crucial the rela�onship between the supplier and the company is trustworthy to
create a loyal alliance that follows through on commitments. This will ensure consumer sa�sfac�on and
sa�sfac�on of all par�es involved in the process.
Ver�cal integra�on seems to be the key to GE’s success. LM Wind Power is the leading independent
supplier of rotor blades in the wind industry and, in 2017, GE completed its acquisi�on of LM bringing GE
one step closer to its goal of bringing affordable, sustainable energy to the world (GE Renewable Energy,
1/20/2018 Week 2 Learning Activities – BMGT 495 6380 Strategic Management (2182)
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2018d, LM Wind Power acquisi�on, para. 2). President and CEO of GE Renewable Energy, Jerome Pecresse
stated, “The comple�on of the LM Wind Power acquisi�on provides us with the opera�onal efficiencies
necessary to support the growth of our wind turbine business, which is the fastest growing segment of
power genera�on. With LM Wind Power’s technology and blade engineering, we are now able to improve
the overall performance of our wind turbines, lowering the cost of electricity and increasing the value for
our customers. Together, we are set to capitalize on the expansion of renewable energy and be a growth
engine for GE” (GE Renewable Energy, 2018d, LM Wind Power acquisi�on, para. 3).
Power of Industry’s Buyers
An industry wouldn’t survive without buyers who purchase the goods and services that firms in an industry
produce. The bargaining power between the industry’s compe�tors and the buyers plays a role in the profit
poten�al of the industry. If buyers have more leverage over the compe�tor, they can bargain for lower
prices. If the situa�on is reversed, compe�tors can raise prices and foster increased profit (Strategic
Management, 2014, Evalua�ng External Environment, p. 95).
Due to the size of General Electric, they have considerable bargaining power for most of their products. The
switching cost for a buyer is extremely high. As long as GE prac�ces good customer service management,
they will have the ability to retain their customers. Also, with proven CRM and product quality, GE would
not have to worry about Buyer Power.
GE Renewable Energy. (2017). GE Renewable Energy hits 60 GW of global onshore wind installed capacity.
Retrieved from h�ps://www.genewsroom.com/press‐releases/ge‐renewable‐energy‐hits‐60‐gw‐global‐
onshore‐wind‐installed‐capacity‐284126?
utm_campaign=60GW+global+installed+base&utm_medium=bitly&utm_source=external+|+web+banner
GE Renewable Energy. (2018a). GE Renewable energy loca�ons. Retrieved from
h�ps://www.gerenewableenergy.com/about‐us/loca�ons
GE Renewable Energy. (2018b). The world’s first digital wind farm. Retrieved from
h�ps://www.gerenewableenergy.com/wind‐energy/technology/digital‐wind‐farm
GE Renewable Energy. (2018c). Unleashing Limitless Energy. Retrieved from h�ps://www.ge.com/investor‐
rela�ons/overview
GE Renewable Energy. (2018d). LM Wind Power/Unleashing limitless Energy. Retrieved from
h�ps://www.gerenewableenergy.com/wind‐energy/lm‐wind‐power
Strategic Management. (2014). Evalua�ng External Environment. Washington, D.C. Saylor Founda�on.
https://www.genewsroom.com/press-releases/ge-renewable-energy-hits-60-gw-global-onshore-wind-installed-capacity-284126?utm_campaign=60GW+global+installed+base&utm_medium=bitly&utm_source=external+|+web+banner
https://www.gerenewableenergy.com/about-us/locations
https://www.gerenewableenergy.com/wind-energy/technology/digital-wind-farm
https://www.ge.com/investor-relations/overview
https://www.gerenewableenergy.com/wind-energy/lm-wind-power
