StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Explaining the Three Conceptual Frameworks by Michael Porter - Essay Example

Cite this document
Summary
The paper "Explaining the Three Conceptual Frameworks by Michael Porter" highlights that there is a need for expertise in understanding the different steps of these systems, which might not be available to all. The systems can only apply to particular businesses and thus not included…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER99% of users find it useful
Explaining the Three Conceptual Frameworks by Michael Porter
Read Text Preview

Extract of sample "Explaining the Three Conceptual Frameworks by Michael Porter"

?Information Management A company achieves competitive advantage by relevantly lowering prices or by providing greater benefits and service that qualify for higher prices. Michel Porter proposed three conceptual frameworks to this effect. The frameworks include generic strategies, Five Forces Model, and Value Chain. This paper will explain these frameworks and give examples of how Apple Company has built competitive advantages using information technology and information systems. The paper will hence analyse the limitations of the three conceptual frameworks. Knowledge management as analyzed in business management is a very fundamental aspect in any organization. This paper will equally explain why information and knowledge have become more important in contemporary societies, differentiating industrial from knowledge economies. The paper will relevantly apply the framework Knowledge Management Value Chain to explain how Knowledge Management Systems can improve knowledge management in organisations, and the limitations of such systems. Explaining the three conceptual frameworks by Michel Porter The three generic strategies for building a competitive advantage include cost leadership, differentiation, and focus. The focus strategy has two variables that include cost focus and differentiation focus. In cost leadership, a company seeks to become a low cost producer in its area of specialization where it must find and exploit available sources of cost advantage. This is possible only where the company is able to command prices in the neighborhood of the average price. In this case, cost advantage is dependent on the structure of the industry and its sources are not exclusive and may include proprietary technology, the pursuit of economies of scale, and preferential access to raw materials. A firm that manifests cost leadership guarantees competitive advantage. Dell Computer Company falls in this strategy. On the other hand, in differentiation strategy, a company seeks uniqueness in the dominant features of its business specialization. The uniqueness attracts a premium price in the company products. The company achieves this by focusing and providing on the most fundamental attributes and needs among buyers in the concerned industry. Mercedes Benz cars fall in this strategy. In cost focus strategy, the company seeks a lower-cost advantage in the minor market segments. It focuses on a basic product that is dominant and high priced but acceptable to sufficient consumers. A small retailer featuring its own-label is a good example in this strategy. In the differentiation focus strategy, a company seeks differentiation between needs and wants that an existing competitor is not providing within just one or a small number of target market segments. A perfume shop is a good example (Porter, 1998, p. 11-15). The five forces model addresses the operating environment of a company and includes the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. The force of threat of entry notes that the ease of easier of new companies to enter the industry generates stiff competition. As such, the numerous conditions that limit the threat of new entrants to the market are the barriers to entry. On the other hand, the force of threat of substitutes is the probability of a consumer to change to a competitive product or service. This arises from the similarity of substitutes. The lower the changing cost the greater the threat. The force of power of suppliers relates to the amount of pressure that suppliers can place on a business. The larger the suppliers pressure power, the greater the competitive advantage. The force of pressure customers relate to the pressure that a customer can place on a business. The greater the customers pressure power, the less the competitive advantage of the company. The force of competition rivalry describes the intensity of competition between existing firms in an industry. Competitive advantage falls with an increase in competition. The competition can be on basis of price or non-price dimensions but in any case, this force is the major determinant of a company’s competitiveness. The value chain is the main tool for analyzing supply chain activities and isolating differences in approach and relative cost. It helps in understanding how the company compares with competitors at a detailed level. The value chain subdivides into primary value activities and support value activities (Porter, 1998, p.36-39). Limitations of the frameworks The value chain calls for a lot of expertise, not applicable to all businesses, its scale and scope is intimidating, and it is challenging to understand a value chain. Indeed, the three frameworks are only applicable to particular businesses and highly depend on the business’s scope of operations. How Apple Company has built competitive advantages over its competitors using information technology and information systems The company uses information technology to build elegant, perfect, high class, convenient, and wide range hardware and software. The company has used technology to design iPods, iPods, iPhones, and laptops that beat the standards of its competitors. Its products are the most valued in the market where they perform various functions at once for different personalities. The company uses information technology in marketing its products where it details how its products will affect customer’s lives. The iPod ads use the latest information technology. Indeed, the creative use of information technology and information systems gives Apple products a premium price (Clayton, 2012, p.1). Importance of information and knowledge Information and knowledge management defines the success of a business in the modern world. It helps in creating new knowledge, disseminating it effectively and helps in the application of the new knowledge. It helps in classifying and organizing the existing information thus enabling the creation and establishment of new knowledge. Through information and knowledge management, we initiate and realize innovations, share crucial information and manage relationships within the organization. Differentiating industrial and knowledge economies An industrial economy is also known as old economy and focuses on basing wealth on ownership of physical capital. On the other hand, knowledge economy is the new economy and focuses on basing wealth on access to intellectual capital. The industrial economy also focuses on products, productivity, planning, and control of scarce resources, and considerably produces to stock. Knowledge economy focuses on customers, perform to order, allocate abundant resources, and ensure customer satisfaction (Leliaert, 2003, p.1). How Knowledge Management Systems can improve knowledge management in organisations The systems help in the acquisition and storage, and dissemination of information necessary in knowledge management. The systems also help in understanding knowledge culture, the discovery of knowledge, definition of the knowledge workstations, and the expert knowledge used in knowledge management. Additionally, the systems define the best stores to maintain knowledge databases and manage knowledge. The systems offer decision support systems that are very significant in knowledge management. The Knowledge Management Systems provides a systematic, effective, and detailed way of handling knowledge in a business organization. Limitations of Knowledge Management Systems There is need for expertise in understanding the different steps of these systems, which might not be available to all. The systems can only apply to particular businesses and thus not inclusive. The language used and the complexity of the systems may be challenging to small business enterprises. Moreover, the process is long and the benefits may not be worth waiting for a business with a small scope of operations. Works Cited Clayton, J 2012, iPad in Business, Viewed 2 April 2012, < http://www.apple.com/ipad/business/profiles/crescent-construction/> Leliaert, P 2003, Industrial vs. Knowledge Economy Porter, M 1998, Competitive advantage: Creating and Sustaining Superior Performance Simon and Schuster, 1998. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Information management Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
Retrieved from https://studentshare.org/management/1396819-information-management
(Information Management Essay Example | Topics and Well Written Essays - 1000 Words)
https://studentshare.org/management/1396819-information-management.
“Information Management Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/management/1396819-information-management.
  • Cited: 0 times

CHECK THESE SAMPLES OF Explaining the Three Conceptual Frameworks by Michael Porter

Different Perspectives of Business Strategy

Work in the field of strategic management is immense; upon searching literature, works of michael porter and Henry Mintzberg seems to be quite prominent in refining the concept of strategy.... that strategy may be deliberate or emergent based on the decisions and actions in question porter suggest that strategy is the use of efficient tools to add value to the processes which may help sustain the market position and remain competitive (Heracleous 2003).... Studying in detail the concept of strategy as presented by the two authors reveals that porter's work has been much focused on the surface where a particular activity suggests taking a particular step; this means using a particular tool to identify a particular course of action that can help select the best strategy at a given point in time....
8 Pages (2000 words) Literature review

International Trade and the Environment

hellip; A new conceptual framework is proposed in which the emphasis is upon firm-level strategic decision-making rather than government policymaking.... The current paper develops a new conceptual framework which addresses this asymmetry by examining the interactions between the government and the firm....
17 Pages (4250 words) Research Paper

Porters Diamond framework

orter Diamond frameworkThe Porter Diamond framework was initiated by michael porter and is used in determining the competitive advantages of a country or a region.... The porter diamond factors of competitive advantages of a nation include; the government, factor conditions, port competition, related and supporting industry as well as the demand conditions that should be applied in all organizations so as to have high competitive advantages over their competitors....
16 Pages (4000 words) Essay

The Application of Porter Diamond Framework to the Automobile Production in Germany

orter Diamond frameworkThe Porter Diamond framework was initiated by michael porter and is used in determining the competitive advantages of a country or a region.... The paper "The Application of porter Diamond Framework to the Automobile Production in Germany" discusses that globalisation is considered to be a challenge and opportunity within an organization thus should be utilized properly so as to increase the sales revenue of an organization.... The porter diamond factors of competitive advantages of a nation include; the government, factor conditions, port competition, related and supporting industry as well as the demand conditions that should be applied in all organizations so as to have high competitive advantages over their competitors....
17 Pages (4250 words) Essay

Porters National Diamond of Competitiveness as a Theoretical Framework

Is porter's national diamond of competitiveness a relevant theoretical framework to explain the competitive advantage in a global industry with strategic importance: the case of the tungsten carbide industries in selected European countries ... he main purpose of this dissertation is to test the relevance of porter's national diamond of competitiveness as a theoretical framework to explain the competitive advantage of the tungsten carbide industries of selected European countries....
60 Pages (15000 words) Essay

Apple - Function and Form

The differentiation element of porter's generic strategy entails the effective designing of the products and services of a company subject to those products of its rivals.... pple should maintain the application of porter's Generic strategies framework.... Apple has been successful in designing its devices with a new look in a bid to be identified by the… According to Bordes (2008), the element of differentiation has led to the creation of unique brand feature and improvement of customer service delivery....
8 Pages (2000 words) Essay

Porters Model of National Competitive Advantage

The idea of this research emerged from the author's interest and fascination in how convincing is Porter's model of national competitive advantage in explaining the characteristics and performance of the business systems of major economies.... hellip; This research will begin with the discussion of the porter's Diamond Model critics and pros, detailing on the authenticity of the study.... The paper then uses porter's Framework to analyze IT Outsourcing industry in China, USA, UK, Germany, and Japan....
11 Pages (2750 words) Essay

Public Finance Economics

The current paper develops a new conceptual framework that addresses this asymmetry by examining the interactions between the government and the firm.... The study "Public Finance Economics" describes the analysis of environmental policy in the context of corporate strategy in the use of ideas from fields as diverse as economics (especially trade theory), strategic management, law, politics, and environmental studies....
16 Pages (4000 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us