MANA 3031 Kamille P. Valdez BSA 3-1D Apply Porters idea in having a successful global business operation.

Provide real examples, specifically domestic companies.Who is Michael E. Porter?

MICHAEL EUGENE PORTER

The essence of strategy is choosing what not to do.

Michael Eugene Porter, born May 23, 1947, is the Bishop William Lawrence University Professor at Harvard Business School. He is a leading authority on company strategy and the competitiveness of nations and regions. Michael Porters work is recognized in many governments, corporations and academic circles globally. He chairs Harvard Business School's program dedicated for newly appointed CEOs of very large corporations. What is Porters Five Forces Analysis? Porter's 5 Forces is an analytical framework for assessing business competitiveness strategies in a particular market. Supplier Power Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.

Buyer Power Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you. Competitive Rivalry What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength. Threat of Substitution This is affected by the ability of your customers to find a different way of doing what you do for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power. Threat of New Entry Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.

Five Forces analysis of The Coca-Cola Company in relationship to its Coca-Cola brand
Threat of New Entrants/Potential Competitors Entry barriers are relatively low for the beverage industry: there is no consumer switching cost and zero capital requirement. There is an increasing amount of new brands appearing in the market with similar prices than Coke products Coca-Cola is seen not only as a beverage but also as a brand. It has held a very significant market share for a long time and loyal customers are not very likely to try a new brand. Threat of Substitute Products There are many kinds of energy drink s/soda/juice products in the market. Coca-cola doesnt really have an entirely unique flavor. In a blind taste test, people cant tell the difference between Coca-Cola and Pepsi. The Bargaining Power of Buyers The individual buyer no pressure on Coca-Cola Large retailers, like Wal-Mart, have bargaining power because of the large order quantity, but the bargaining power is lessened because of the end consumer brand loyalty. The Bargaining Power of Suppliers The main ingredients for soft drink include carbonated water, phosphoric acid, sweetener, and caffeine. The suppliers are not concentrated or differentiated. Coca-Cola is likely a large, or the largest customer of any of these suppliers. Rivalry Among Existing Firms Currently, the main competitor is Pepsi which also has a wide range of beverage products under its brand. Both Coca-Cola and Pepsi are the predominant carbonated beverages and committed heavily to sponsoring outdoor events and activities. There are other soda brands in the market that become popular, like Dr. Pepper, because of their unique flavors. These other brands have failed to reach the success that Pepsi or Coke have enjoyed.

Household Consumer Products Industry

The Bargaining Power of Buyers Consumer-products companies face weak buyer power because customers are fragmented and have little influence on price or product. But if we consider the buyers of consumer products to be retailers rather than individuals, then these firms face very strong buyer power. ( Strong buyer power from retailers.) The Bargaining Power of Suppliers More than likely, consumer-products companies face some amount of supplier power simply because of the costs they incur when switching suppliers. On the other hand, suppliers that do a large amount of business with these companies also are somewhat beholden to their customers. Nevertheless, bargaining power for both the firms and their suppliers is probably limited. ( Limited supplier power.) Threat of New Entrants Given the amount of capital investment needed to enter certain segments in household consumer products, we suspect the threat of new entrants is fairly low in the industry. The test is whether the small manufacturer can get its products on the shelves of the same retailers as its much larger rivals. ( Low threat of new entrants.) Threat of Substitute Products Within the consumer-products industry, brands succeed in helping to build a competitive advantage, but even the pricing power of brands can be eroded with substitutes such as store-branded private-label offerings. In fact, some of these same store-brand private-label products are manufactured by the large consumerproducts firms. The firms believe that if they can manufacture and package a lowerprice alternative themselves, they would rather accept the marginal revenue from their lower-priced items than risk completely losing the sale to a private-label competitor. ( High threat of substitutes.) Rivalry Among Existing Firms Consumers in this category enjoy a multitude of choices for everything. While many consumers prefer certain brands, switching costs in this industry are quite low. It does not cost anything for a consumer to buy one brand of shampoo instead of another. ( High degree of rivalry.)

The Banking Industry

Threat of New Entrants Opening a bank requires a lot of capital. Every member of the board of directors need to be checked and verified by the fed, this usually takes a long time. The filing also takes a long time for the fed to approve. Rivalry Among Existing Firms Banks are branching everywhere. The banks are offering incentives for opening accounts. Some of the bankers are required to open certain amount of accounts every month. This makes the competition very fierce. The Bargaining Power of Suppliers Capital is the primary resource on any bank and there are four major suppliers of capital in the industry: 1) Customer deposits 2) mortgages and loans 3) mortgagebaked securities 4) loans from other financial institutions. By utilizing these four major suppliers, the bank can be sure that they have the necessary resources required to service their customers' borrowing needs while maintaining enough capital to meet withdrawal expectations.The power of the suppliers is largely based on the market. The Bargaining Power of Buyers If the customer doesn't like anything, and I mean anything of his/her bank. He can open account in another bank, which it won't take him more than 30 minutes. This is why customer service is becoming so important in this industry. The bank I work at offers a tons of stuff for the customers, including: free pens, free coining counting machine, lollipops, dog biscuit, even a greeter at the door, etc. Threat of Substitute Products Customers can always put money somewhere to make a little interests, there are all kind of bonds, mutual funds, stocks etc. However, the power of check clearing of the banks are undeniable. All the paychecks, payments goes through some banks to clear. Imagine if there is no banks to clear checks, then the whole economy will goes in halt. There are other financial institutions other than banks, such as thrifts, credit union, etc

In your own opinion, [do you think] globalizing the economy would be more beneficial if we have ASEAN or regional bloc as a form of pursuing globalization? What is Globalization?

Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. Put in simple terms, globalization refers to processes that promote world-wide exchanges of national and cultural resources. Advances in transportation and telecommunications infrastructure, including the rise of the Internet, are major factors in globalization, generating further interdependence of economic and cultural activities. Globalization refers to being able to compete to international markets apart from the local markets where your business is located. That is how I understand the concept of Globalization. What is ASEAN? It was the first question to enter my mind as I have to think for a deeper definition of it. Yes, we all know that it stands for Association of Southeast Asian Nation. Reading further, Ive found out that it is composed of 10 countries who reach out their helping hands to neighboring countries to have a mutual relationship and exchange with each other. On one hand, ASEAN seems t be the more beneficial one because products from one country are being imported in a

more organized and faster way. ASEAN plays a big role in making the globalization work. It does make the connection between countries so that it would be done in a systematic way. In this past-phasing stage of economy, ASEAN has been there to help each other have the ideas so that those things or products would not stop in just four corners of one country. As a country is being able to adapt those coming from neighboring ones, it begins to think of improvements and assessments so it would continue to have the interest of people from other country simple yet one good example of how globalization works between countries. But then we are asked about being beneficial to economy. With ASEAN, do we really reach the most possible progress we could have? Globalization is the name of the game. Therefore, we should learn to compete with our best competitive advantage. Strategies will be needed of course. I myself think that being a member of ASEAN is not the best option we could have towards the global competition. For me, compared to other countries, those being mentioned as members of ASEAN are weaker. Come one, if we want to be progressive, we should be partner with countries who are already having their names as the most progressive. It is really hard to compete with other countries, but being endorsed with known countries, transacting with others will be less difficult. Hence, we will gain their trust. The point of this is, we should accept the fact that ASEAN countries also find it difficult to compete with others even with forces joined together. If we tend to compete globally, then we should know what it takes and prove that we are worthy of it. If we want to have a long lasting progress, we should have the strongest foundation. It could only be given by countries that made such trademarks in the world. And as we all know, ASEAN countries have none of these. I would want to say that we should move on to our edges. We should try to seek to be with the strong countries. We deserve to be there. At the end of this, I want to say that its not beneficial in globalizing the economy to have ASEAN. There are more means to compete globally. There are ways out there we should go on with. And there might be strong countries waiting for our partnership.

Which is more preferable to diversify your business; by acquisition or mergers? And in what industries are the two most applicable? Explain. Provide examples.

One plus one makes three.

Special Alchemy of merger or acquisition.

Being asked, acquisition is more preferable over merger when it comes to diversification of ones business. Diversification means enlarging or varying range of products or field of operation. Impliedly, this takes a lot of decisions to be made. Some takes long enough while others only take a matter of minutes. Diversification has a lot of considerations to be taken in. It is a major decision that comes to a company when it feels that there is a need to do so. And the future of the business depends of the business depends on the success of this said major change. Now, let us take a look between the two options. First, there is what we called merger. By definition, merger means combination of two companies to become one. Meaning to say, there are many bosses in a company. Many voices should be heard. Many eyes should be able to look at everything. A company will be at a disadvantage when it has a lot of people to be consulted before

performing an action. As I have said on an earlier statement, some decisions take only a matter of minutes. Now, what will be the outcome if there are many people to be asked first but the time is running, needing for a quick decision? And in order to succeed on this major decision, there really is no room for mistakes neither for uncertainties. Looking at the other choice left, the acquisition. As by definition, it is an act of purchase of one company by another. Meaning to say, there is only one owner left in this scenario, which is a good factor for a diversification of the business. In that case, we know that this someone should have all the abilities it takes to make best decisions. It really is an advantage because only one person is to be consulted. Employees would not be confused to whom they are going to ask permission, signatories or even approvals. Hence, a business wouldnt be able to diversify if in the first place, it has failed already. Meaning, this stage has come to a business become at one point in its cycle, it succeeded that is why it is now aiming for a much more challenging stage in business. Another factor that I see in this situation is, when it is merger, and a business is about to diversify, of course, products will be known because of the two companies. Hence, it might become their trademark in the market. But what if it so happens that the merger is over? What will happen to products being built by two during the time of their merger? It is more likely to happen that the product will lose its advantage in the market. For example, two companies merged to build fast food chains and they did it. They succeeded on making profits. \but them like any other business, there are some issues between the two of them that make up their minds to split off. If the fast food chain they have built has taken its advantage in the market, both companies will claim for the credit and what happens now is sooner or later, the fast food chain will no longer have good management because of the conflicts of owners. Wherein if it by Acquisition, this problem should have been avoided and have not occurred at all. To sum it all up, acquisition is preferable because the diversifying a business is better when there is only a sole owner. No conflicts, No confusion.

How can you introduce manufacturing cost reduction in the value chain and what are the strategies which can be adopted?

Value chain refers to the process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales. The question is, How can you introduce manufacturing cost reduction in the value chain? This question has lead me to a lot of ideas upon hearing it. Reduction of manufacturing cost has always been a target for some companies especially to those which are just in the beginning of the cycle. In the growing industries that have made a name in the field they are in, they may, at some point, disregard the reduction because they know that their products would be sold to customers even if it costs higher. Now, the challenge is to introduce this reduction of cost. Lets begin with giving people the advantage of reducing the manufacturing cost. If companies are able to reduce their costs, they will be able to allocate that money for other investments that will help the business to run better. Reduction of manufacturing cost would also lead to a higher profit. We know that expenses are the major source of outflow in a cash flow. Now if we are able to reduce it, wed be able to generate more inflow. In that case, our standing would be better. Our profitability will be better. We all know that there really are some stages in the operation that does not add value to the product. The product will still be the same either with or without them. The company only includes them so that they are sure that all processes possible are being undergone. If they would cut those non value activities, it will be better because time spent for those could be spent to value added activities.

One of the possible strategies that could be made so that cost could be reduced is to use eco-friendly materials. We all know that apart from lower cost, we are also helping our nature to maintain or even help it revive the beauty which was taken from it. Nowadays, eco friendly materials are becoming a trend- a trend which will never be out of fashion because it is a way of helping nature. Another strategy is by using machines. Being capital intensive means having less direct labor. Machines do things in a constant way as human force yet machines do it in a more uniform way. Yes, technology is now a trend and could be a competitive advantage for a company. See, it will not only reduce the cost but will able you to have a great stand in the field. Imported products are really more expensive compared to local products. Sometimes, they are just of the same quality. And there really are times when local products are better than imported ones. Theres no harm in trying to use local products. Aside from the fact that you are helping your own countrymen, you are also promoting what your country is producing. Most companies depend on imported ones because the brand seems to be name and basis of the game. Despite of this, Im still looking forward for the day to alter this belief because by just looking around, we can find the things we need for our business. Above all this, manufacturing cost reduction has a great impact to a company. It just depends on the company on how it will cut its cost. The selection of cost to be cut is so crucial that should have been thought a hundred times.