Forces and Trends ResearchIntroduction"Strategic management is the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company's objectives. Because it involves long-term, future oriented, complex decision making and requires considerable resources" (Pearce & Robinson, 2004, p. 19). In order to strategize plans to achieve goals, companies must research the current forces and trends that could either help or hurt the company's desired outcome. By looking at the threat of substitutes, economic forces, the operating environment, defining industry boundaries and threat of entry and understanding each concept strategies can be developed according to any situation or industry.
Kristin BellCourse Concept: The Threat of SubstitutesWhen a company understands the influence and power competitive forces can have on their industry, the organization can adapt and implement options that will allow them to improve their own competitive position. Competitive forces in general consist of those forces that affect a company's ability to conduct its business, serve its customers, and make a profit.
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MGM MiragePorter's five forces include three forces from 'horizontal' competition however; evaluation of the threat of substitutes will be the focus.
The Threat of SubstitutesThe threat of substitutes refers to, "the availability of a product that the consumer can purchase instead of the industry's product. A substitute product is a product from another that offers similar benefits to the consumer as the product produced by the firms within the industry," (Wathen, 2008). This threat affects the competition within an industry and can influence a company's profitability. This occurs because when a substitute is available, a customer can choose the substitute over a business. Having substitutes available can increase competition and decrease profits, because each company offering the product or service may need to offer discounts or price cuts, as an example, to entice a...