Week 2 - External Analysis

Porter's Five Forces Model is often used to analyze competitive forces in the industry environment to identify opp and threats.
In the case study, "Price Wars in the Breakfast Cereal Industry", the leading traditional cereal manufactures like Kellogg and General Mills are dominating breakfast market and making good profit. However new competitors with private label like Walmat's entering the market and new substitutes like bagels becoming American's breakfast. Both new competitions made all major cereal manufactures facing huge challenge and have to reduce their price and suffer from losing market shares.

In another case, "Circumventing Entry Barriers into the Soft Drink Industry", a small soft drink maker, RC Cola, whose strategy when facing big giants Pepei and Coca-Cola is to work with low price retailers like Walmat to offer much-lower price soft drink when still keep high quality. RC Cola saves big marketing cost and transfer the saving to customers which give them a niche market.


Industry Life Cycle Analysis is another important analysis needed to be done earlier as possible. In different cycle, company needs to have different strategy for pricing and marketing. In earlier cycle, how to keep company alive and market for growing could be more important than late cycle. In late cycle, strategy could be like how to attract customers from other competitors.

Week 1 - Strategic Leadership

What is the strategy of your company? Is that a formula or a process to follow?
When we heard how "good" the strategy a company has and makes it successful or how "bad" and make it fail. People wonder if there is a "defined" way to plan and review their strategy planning. Luckily, there is a formula here. Starting with the corp vision/mission, analysis thru SWOT then thru functional, business, global and corporate level strategy. A refined strategy can be defined.

Walmat's vision is to provide goods with the lowest price every day and that is their vision/mission, with such vision/mission. Sam Walton did everything to keep the lowest price everyday happening. By locating the best possible store location, the most efficient inventory system, the best buying power, and the best possible employer-employee relationship. Walmat is running strongly and profitable no matter economy is good or bad.

Level 3 communication's founder, Jim Crowe, believes fiber-optic network would be needed everywhere and Internet traffic will boom 10 times a year. With such vision and analysis, L3 was built. However, he made some incorrect forecast. Internet traffic boom like double a year instead of 10 times a year and there were lots of competition entering the same market. Put together both, L3 was almost gone. Lessons we learned from it is 1. vision is still important 2. but a reasonable forecast and analysis is more important.