organization context part1

What is organization context?

The organization context is the set of forces surrounding an organization that have the potential to affect the way  it operates and its access to scarce resources.

The organization context can divided into 3 parts:
1. Internal
2. Competitive (micro)
3. External    (macro)

Today, I will analysis the internal environment.


Porter's Five Forces

Porter's theory on competitiveness is that it is based on 5 factors.

1.Supplier Power
2.Buyer Power
3.Competitive Rivalry
4.Threat of Substitution
5.Threat of New Entry



Example:
This is Porter's five forces analysis example for a car industry.

1.Threat of new entry (very weak)

• Large amount of capital required
• Few legal barriers protect existing companies from new entrants
• New entrant could easily access suppliers and distributors
• Governments often protect their home markets by introducing high import taxes.

2.Buyer power (strong)

• There are many buyers
• Buyers do not threaten backward integration
• Buyers can easily choose alternative car brand
• It does not cost much for buyers to switch to another brand of vehicles or to start using other type of transportation

3.Competitive rivalry (very strong)

• Moderate number of competitors
• Customers are loyal to their brands 
• Industry is very large but matured
• There is moderate threat of being acquired by a competitor

4.Supplier power (weak)

• Large number of suppliers
• Materials widely accessible
• Suppliers do not pose any threat of forward integration
• Some suppliers are large but the most if them are pretty small

5.Threat of substitutes (weak)

• There are many alternative types of transportation, such as bicycles, motorcycles, trains, buses or planes
• Substitutes can rarely offer the same convenience
• Alternative types of transportation almost always cost less and sometimes are more environment friendly