business blog 26-10-2013

Finally is the last week till half term, it is so exciting to have a term break, that we can take a little break from all the works, as I think most of don’t really got enough sleep due to the business law assignment. And my plans for half term is to visit London, sleep, catch up with the reading and finishing assignments.

The topic that we are learning this week is the placing organization in context – internal environment and micro environment. It is about that organization do not exist in isolation, they are very much influence by both the internal and external factors, which is illustrated by the Porter’s five competitive forces.

Before there are the five forces, organizations always only focus on their direct competitors within the industry, however, as in the five forces, we knew that there isn’t only the direct competitors will threaten them, there might also be a substitute product and new entrant. More than that the bargaining power of the customers and suppliers is important too.

I think this chart is extremely important to every organization, this can letting the management of the organization identify what might threaten their business. Take Nokia as an example, it didn’t take this chart seriously, that they don’t notice there will be a substitute product (smart phone), and they don’t even notice there will be new entrant (apple and Samsung) to the mobile phone industry. Therefore, Nokia then face financial difficulty in the recent year and being acquired by Microsoft later. The example of Nokia demonstrated how important is distinguishing the five forces for a business.