Literature Review: The Five Competitive Forces That Shape Strategy

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2. Literature Review 2.1 Automobile competitive in developing country Emerging markets offer a wide range of opportunities for firms from developed markets, especially in terms of high growth potential. However, business models that enable firms to achieve competitive advantage in their home markets are often be challenged by the different nature of emerging markets. Firms, therefore, have to innovate and adapt their business models to better fit the specific context of these international markets. The firms should adapt their business models in four phases: international extension, local emergency, local expansion, and local consolidation. Firms adjust business model components along this process to develop a local emerging market business model. In each phase of the business model’s adaptation process, firms emphasize different components of the business model, before they enter into continuous adjustments of all business model components. Firms from developed markets are increasingly looking at emerging markets for growth options or to compensate for adverse developments in their core markets. For example, German car manufacturers rely more and more on emerging markets to offset reduced sales in domestic and developed foreign markets (Sehgal, 2011).…show more content…
Porter’s article, “The Five Competitive Forces That Shape Strategy”, is an extension of his first work, “Porter’s Five Forces”. This article addresses forces beyond the existing competition and creates a framework that helps strategists understand industry structure and analysis. Industry structure is the basis for competition and profitability. The five forces that shape industry competition are the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, substitute products, and finally rivalry among existing competitors. While there are many forces that many affect profitability in the short run, these five competitive forces drive industry profitability in the medium and long

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