MAN2002 Family Business Management Session #8

Today, we started the class by watching an interview video with Professor Michael E. Porter from Harvard University. The following points are crucial in industry analysis and competitive environment. 

  1. Supplier Power: An evaluation of how simple it is for suppliers to raise prices. The number of providers of each vital input, the distinctiveness of their product or service, the supplier's relative size and strength, and the cost of moving from one source to another all influence this. 

  1. An evaluation of how simple it is for buyers to lower prices. This is influenced by the following factors: the number of customers in the market; the value of each individual buyer to the organization; and the cost of switching suppliers for the buyer. When a company just has a few big customers, they may typically impose conditions. 

  1. Competitive Rivalry: The number and capability of rivals in the market are the primary drivers. Many rivals will lower market attractiveness by delivering undifferentiated products and services. 

  1. Threat of substitution: Customers are more likely to move to alternatives in reaction to price rises when close replacement items exist in a market. This decreases both providers' power and the market's appeal. 

  1. Threat of new entry: Markets that are profitable attract new entrants, eroding profitability. Profitability will decrease to a competitive rate unless incumbents have substantial and long-lasting obstacles to entry, such as patents, economies of scale, capital needs, or government laws. 


We also learned that strategy is useless unless the way you drive your company is understood and that making good choices and reinforcing it is important to gain a competitive advantage.  

Afterwards, we applied this analysis towards airplane companies, Coca Cola and then to our respective companies from last class. After applying this analysis on TikTok, we learned about the Four Rooms Model to help decide who makes which decisions in each respective room for the family business. 


CGMA. (2013, June 11). Porter’s Five Forces of Competitive Position Analysis. Retrieved October 25, 2021, from https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.htmls 

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