Innovation Technology Entrepreneurship - Assignment Example

Strategic Management Contents Contents 2 Answer Porter’s five forces model 3 Answer 2: Organizational power and politics 6 Answer 3: Innovation technology entrepreneurship 9 References 13 Answer 1: Porter’s five forces model The Porter’s five forces model is a strategic management tool that is used to analyze and assess the level of competition and scopes within an industry. The analysis was invented by Michael E. Porter in the year 1972. This tool is commonly used for assessing the macro environment of a business and thus, can be used for the development of suitable business strategies. This model draws upon the various industrial organizations related economics to determine the five forces which can be used to understand the attractiveness and competitiveness factors within an industry. Figure 1: Porters five forces model framework (Source: Hill and Jones, 2008) The five forces model consists of five main macro environmental factors that help to decide the attractiveness of an industry and the scopes of a business in an industry. These five factors are explained as follows: Intensity of competitive rivalry: The intensity of competitive rivalry means the level of competition that is present within a specific industry. This is studied in order to understand the competitors of a company in the sector and can be used to devise the necessary competitive strategic for the company to succeed and compete in the particular sector. Bargaining power of suppliers: The bargaining power of suppliers refers to the degree of control that the suppliers in an industry have over the companies. This is necessary to analyze so as to understand the position of the company with respect to the procurement and supply management systems. Bargaining power of buyers: The bargaining power of the buyers indicates the level of influence that the customers of the industry have on the way the industry and its entities function. This is an extremely important factor that should be taken into account in the consumer oriented industries. Threat of substitute products: The threat of substitute products means that availability of the alternate products or services that may act as a replacement for the particular products or services of a company. This is necessary for evaluation in order to develop the strategies for creating competitive advantage in the industry of operations of a business. Threat of new entrants: The threat of new entrants acts as a major threat of businesses across the world. This is because, a new company entering into an existing industry leads to a number of challenges and constraints for an existing business in the industry. Often in case of specific industries in which the switching costs of brands and brand loyalty are low, the entrance of a new player in the market reduces the profitability, customer base and revenue of a company to a high extent (Rivard, Raymond and Verreault, 2006). The main aim of using the Porter’s five forces model is to determine the scopes and threats within an industry, thereby deciding on the overall industry attractiveness and profitability (Porter, 2008). An attractive industry is one in which the combination of the five components of the Porters five forces model can act in a combined manner to drive up the overall profitability of a business which will operate within the industry. On the other hand, an unattractive industry is one in which the five forces of the model can act altogether to decrease the scopes of success and sustainability of an organization in an industry. The Porter’s five forces model can be employed for evaluating the macro environmental situation of a particular organization or a specific industry. The model can also be particularly useful while choosing a new market for expanding the business into or while selecting an industry for starting a business. The Porter’s five forces model is a significant technique that has been used over decades for the creation of competitive advantage for a business within its industry of functioning. This model is not only advantageous for the purpose of understanding the attractiveness of an industry but it can also be used to identify the entry and exit barriers within an industry. The Porters five forces model can be implemented as a useful model by organizations across the world for understanding the opportunities and threats in the broad environment of an industry and thus, is taken up as a preferred tool of strategic management by managers across the world. A number of strategies including business level strategies, corporate level strategies as well as departmental or unit level strategies can be formulated on the basis of the findings and interpretations of the Porter’s five forces model. This model was developed by Michael Porter as a reaction and extension to the SWOT analysis tool. This model has been devised with the aim of overcoming the weaknesses of the SWOT analysis tool. Unlike the SWOT analysis tool, the five forces model can be applied on a broader range of issues within an industry and considers diverse external factors that may impact a business or an industry in the existing and future scenarios. Thus, this model goes a long way in helping the strategic managers of a company to develop suitable generic strategies by considering all possible macro environmental factors. The strategic managers can employ this model to decide on the future strategic direction of a business. The role of the five forces analysis tool in competitive advantage creation is becoming more crucial in the modern business environment in which the consideration of the external industry factors is mandatory. The five forces model can be used as a main strategic decision making tool along with other strategic management analysis tool like the SWOT analysis and PESTEL analysis to correctly assess the external factors that can positively and negatively impact an enterprise (Johnson, Scholes and Whittington, 2008). Answer 2: Organizational power and politics Power is the central component of politics within organization. It defines the ability of the leaders or influencers within an organization to direct and influence other entities in the enterprise. However, power should not be confused with dominance which is an autonomous factor within an organization. Power relationships in organizational politics denote the relational, sanctioning and interdependent relationships which are aimed at supporting the management in achieving the desired corporate objectives. The role of politics is crucial in the management as well as the strategic development of an enterprise. The strategic leaders of contemporary organizations face a number of challenges with respect to the management of the organizations. In these scenarios, corporate politics and power often help them to perform key function like organizational hierarchy planning, position planning, succession planning etc. Organizational politics can be defined as the employment of power as a main source of energy creation that can be used to manage different levels of organizational relationships. Corporate organizations have to enter into the political game in order to achieve an influential position (Nag, Hambrick and Chen, 2007). The organizations try to seek higher levels of influence in order to increase their autonomy, enhance the organizational morale and maintain the essence of the organization as well. In order to enhance the level of influence, the organizations often execute directives and provide information in a manner that would satisfy their self interests. Figure 2: Sources of power within an organization (Source: Buchanan and Badham, 2007). There may be a number of distinct sources of power within an organization including legitimate power, reward power, coercive power, referent power and expert power (Figure 2). Strategic leader power is another main source of power within organizations which makes them capable of influencing the functioning of the organization while considering the in the internal and external conditions (Morriss, 2002). However, there may be a second face of power in which power leads to uncontrollable levels of autonomy which can actually damage the efficient and compliant functioning of an organization. Unethical behaviour and exploitative activities are also the results of another face of power and politics within an organization (Haugaard, 2003). Figure 3: Consequences of power (Source: Buchanan and Badham, 2007) The consequences of power and politics are different depending on the way these are managed within an organization. While expert power and referent power cal]n lead to higher levels of commitment, legitimate power and reward power may lead to higher degrees of compliance , coercive power can act in a negative manner and lead to resistances and conflicts within the organizational entities (Figure 3). The dark side of politics and power in organizations may have consequences like intimidation, fear, deception, uncertainty and unethical practices which are highly derogatory for the sustainability of an organization. Political behaviour within an organization can be controlled by several ways including the provision of sufficient resources, removing unfair political norms, establishing clear and unbiased rules, increasing the opportunities for communication and coordination, and ensuring the free flow of information among different levels of employees. Thus, it can be said that the role and influence of politics in an organization can be advantageous for the organization if power is managed and developed in a properly guided, strategic and controlled way. Answer 3: Innovation technology entrepreneurship Technologies comprise of ideas and rules that pave the way in which goods and service should be produced by companies to ensure continuous success. Technological inventions refer to the new ideas and rules regarding which products or services to produce and how to produce them in the most cost effective, profit reaping and beneficial manner. The need for technological inventions often result in the development of technological innovations in which new ideas and rules are used in the practical scenario by the entrepreneurs as a way of application or commercialization in businesses (Rainer and Turban, 2009). Technological innovations are identified to be of prime importance because they contribute to enhanced degrees of economic output and also enable the companies to deliver innovative products and services that can impact human capabilities and lives to a large extent. In this modern era, all the businesses and entrepreneurial ventures move hand in hand with better innovation and technology. With the continuous rise in competition and tough survival, entrepreneurs are banking on something which sets them apart from their competitors and also give them an edge above others in better planning and managing the business. Here, technology and innovation plays an important role. By using innovation techniques of managing business, it can be managed both efficiently and effectively (Howells, 2005). Using technology in entrepreneurship can be beneficial for both start ups and established entrepreneurial ventures. Technology and innovation can be used in various places in a business starting from procuring raw materials to better managing the selling process. Understanding and evaluating the consequences and antecedents of entrepreneurship, innovation and technology is crucial because the changes in technology have been proved to be directly related to the changes in the economic performances of units across all levels including enterprises, industries as well as the national and international levels (Figure 4). Figure 4: Innovation technology and entrepreneurship (Source: Howells, 2005) Since, the technological changes are aimed at improving the quality and standard of life, therefore, the use of technological innovations always acts as the main strategy for success in an entrepreneurial venture. Today, the globally integrated economy and technological age has led to the creation of a corporate and business environment in which competition is driven by knowledge. As such, the need for technological innovations has become more profound among entrepreneurs and business managers and the theories of development and growth in technological innovation has taken up a central role in all kinds of entrepreneurial ventures. Moreover, the relationship between entrepreneurship, technological innovation and global development is an integrated relationship which is necessary for the development of the global economic and corporate structures and functions (Fagerberg, Mowery and Nelson, 2006). Breakthrough innovations can be considered to be both disruptive and transformative in nature depending upon the employment of these innovations. Technological innovations are crossing the existing organizational lines and as such are considered to be mandatory for enabling the entrepreneurs to evaluate and capture opportunities in the external globalized and inter connected business environment. Business creations are currently majorly dependant on technological innovations considering the fact that technology has emerged as the most powerful and influential component of sustainability, success and competitive advantage creation. Throughout the history of business, entrepreneurship has assumed various roles depending on the requirements and opportunities that are present in the broad business environment. However, in all the roles of an entrepreneur, innovation continues to be a primary component which helps to build up the skills and achievements of an entrepreneur, irrespective of the field in which he or she has started or plans to start his business venture. Both product innovation and process innovation play crucial roles in entrepreneurial ventures. Additionally in the current days, technological innovations have started to achieve a more significant position in all types of business ventures. Like the concepts of entrepreneurship and innovation, that of technology is also complex and multivariate in nature. According to the different entrepreneurship theories, one of the main roles that are played by the entrepreneur is that of an innovator. The supply side theory of entrepreneurship suggests that the role of an entrepreneur in the manufacture and distribution of products and services is more prevalent for products and services for which directly determined supply and demands are noted (Flyvbjerg, 2001). In the modern corporate environment, the pattern of demand and supply of goods and services are construed by the high level of competitive intensity in every field which makes it necessary for the entrepreneurs to assume serious roles as innovators. In addition, in order to compete in the intensely competitive industries, taking up technological advancements and employing technological innovations has become a pre requisite in the domain of entrepreneurship. References Buchanan, D. A. & Badham, R. A., 2007. Power, Politics, and Organizational Change Winning the Turf Game. London: Sage. Fagerberg, D. C., Mowery, R. R. & Nelson, A., 2006. The Oxford handbook of innovation. Oxford: Oxford University Press. Flyvbjerg, B., 2001. Making Social Science Matter. University of Cambridge Press: Cambridge. Haugaard, M., 2003. Reflections on seven ways of creating power. European Journal of Social Theory, 61, 1, pp. 87-113. Hill, C. W., & Jones, G. R., 2008. Strategic Management: An Integrated Approach: An Integrated Approach. Stamford: Cengage Learning. Howells, J. J., 2005. The Management of Innovation and Technology. London: Sage. Johnson, G., Scholes, K., & Whittington, R., 2008. Exploring corporate strategy: text & cases. London: Pearson Education. Morriss, P., 2002. Power: A Philosophical Analysis, 2nd ed. Manchester: Manchester University Press. Nag R., Hambrick, D.C. & Chen, M. J., 2007. What is strategic management, really? Empirical induction of a consensus definition of the field. Strategic Management Journal, 28, 1, pp. 935-955. Porter, M. E., 2008. The Five Competitive Forces That Shape Strategy. Harvard business Review, 12, 1, pp.40-42. Rainer, A. & Turban, R., 2009. Introduction to Information Systems, 2nd edition. New Jersey: Wiley. Rivard, S., Raymond, L. & Verreault D., 2006. Resource-based view and competitive strategy: An integrated model of the contribution of information technology to firm performance. Journal of Strategic Information Systems, 15, 1, pp. 29-50. Read More