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1.0 前言
自从全球化发展以来，全球化已经极大地促进了信息的交流和资源的共享,与此同时，企业之间的竞争力也越来越激烈。为了抓住一些市场份额,公司必须设计合适的策略来帮助他们获得更高的利润，维持企业的长久发展,以稳定企业在行业竞争中长久以来的领军位置。(菲利普,2003)在所有这些关于战略管理的理论中，迈克尔·波特的五种力量模型和核心竞争力理论非常实用,他们通常是由公司来设计他们的应用策略,帮助他们面对其他竞争对手所带来的挑战。
这篇文章将评估迈克尔·波特的五种力量模型和核心竞争力理论的批判方式，简要分析这两个理论的优点和缺点,本文将以宝洁为例。
2.0 关于宝洁的简介(Procter & Gamble)
宝洁(Procter & Gamble)是一个美国的日常产品制造商，也是世界上最大的日常产品的公司之一。宝洁(Procter & Gamble)成立于1837年,现在遍及世界各地，共有110000多名员工。P & G享有很高的声誉,在日常产品领域获得非常高的市场份额。主要经营洗发水、护发素、皮肤护理、化妆品、婴儿护理产品、妇女卫生用品、医药、食品、饮料和个人清洁用品。事实上,我们日常使用的许多产品都是由宝洁公司制造的。
1.0 Introduction
Since globalization facilitates the communication of information and resources, competences among companies become more and more intense. In order to grab some market share and have a place in their own line, companies have to design proper strategies to help them earn a higher profit margin and sustain that position over a long period. (Philip, 2003) Among all those theories concerning strategic management, Michael Porter’s five forces model and the core competence theory are very practical and both of them are often applied by companies to design their strategies to help them in facing challenges brought by other competitors.
This essay will evaluate Michael Porter’s five forces model and the core competence theory in a critique way. As to make it more clearly in explaining the advantages and disadvantages of both theories, this essay will use P&G as an example.
2.0 Brief introduction about Procter & Gamble
Procter & Gamble is a daily product manufacturer of the United States. It is also one of the biggest daily products company in the world. Established in 1837, Procter & Gamble now has more than 110,000 staffs all over the world. P & G enjoys a high reputation and acquires a very high market share in the line of daily products. It mainly deals with shampoo, hair conditioner，skin care，cosmetics, baby care products，women sanitary articles，medicine, food, beverage and personal cleaning supplies. In fact, many of our daily used products are all manufactured by P&G.
3.0 General view about Michael Porter’s five forces model
The five forces model is put forward by Michael Porter. According to Porter, there are five forces that influence and decide the competence intensity and market appeal in a line, namely they are suppliers’ bargaining power, buyers’ bargaining power, threat of potential new entrants, threat of substitute products as well as the rivalry among competitive sellers. (Michael Porter, 1980)
Firstly, bargaining power of suppliers has a great impact on the production of a company. It refers to suppliers’ ability to raise prices or reduce the quality of goods. (Mike, 2009) If the supplier supplies some products with unique characteristics and hardly can be substitutes by other products or the supplier has many partners and neither of the clients is the sole important client to the supplier, its bargaining power is stronger. For P&G, suppliers’ bargaining power is relatively low for the daily products are manufactured in a lower price and they are manufactured in low payment and high labor intensity countries.
Secondly, Buyers’ bargaining power can be strengthened if there are a few buyers and each of them acquires a large proportion in the sellers’ market. Thus, it will raise the costs of company and reduce their profit margin. (Charles & Gareth, 2012) For P&G, buyers’ bargaining power is also weak. Though there are many other daily products manufactures, P&G has a good reputation on its product quality, price as well as company image. Thus, buyers usually will stick to buying its products without shift to other brands.
Thirdly is about threats of potential new entrants. Along with bringing in some new force and new resources to the line, potential new entrants will compete with current companies for source materials and market share. New entrants often bring additional capacities together with them. (Robert et al., 2008) The threat of potential new entrants comes from two major factors: the entry barrier of that line and the reaction of current companies. Entry barrier mainly includes scale economy，product differentiation, capital needs, conversion cost, governments’ regulation and policy, natural resources, geographical environment and so on. Reaction of current companies refers to their actions on maintaining market share and retaining customers. The more active actions they take, the threat of potential entrants is weaker. As to the line of daily products, the cost is very low. However, the entry barrier is very high. It is hard for new entrants to get known by customers since big daily manufactures like P&G and Unilever are well known and widely accepted by people all over the world. If a new entrant wants to grab market shares, it has to develop for many years and strive hard on its advertisements, research and development, sales network, brand value and other aspects.
The fourth force is the threat of substitute products. For substitute products can satisfy the same need as other competitors, companies facing a great challenge. (Farhad & Azhdar, 2003) First of all, the price advantage and profit elevation will be limited when some substitute products occur. Then, substitute products manufacturer exert pressures on the current enterprises. In order to face the challenge, current enterprises have to invest more money on product innovation, improve product quality as well as develop distinctive features. All in all, the lower price, better quality the product is and lower customer conversion cost is, the more threatening to current enterprises.
Last but not the least is about the rivalry among existing firms. It usually shows in competitions on price, advertisements, product innovation, after sell services and so on. The rivalry among competitors can be strengthened when the entry barrier of the line is relatively low and there are many strong opponents. Besides, if the competitors lower prices to promote, it will also make their competition more intense. 3.1 Advantages of Michael Porter’s Five Forces Model
As Michael Porter’s Five Forces Model applied by many enterprises in their strategy management, it proves to be very effective in several aspects.Once they are understood, a company can develop a strategy that utilizes them to their advantage. (David & Garry, 2010)
Firstly, the five forces model gives a comprehensive overview for enterprises to evaluate their current marketing situation. It analyzes the forces that influence a company’s management and competence both inside and outside the line. Besides, it considers both current threat and potential threat, i.e. potential new entrants. In managing these five forces, a company can be more alert to market changes so as to make quick adaptations.
Secondly, together with other strategy like stakeholder mapping, Porter’s five forces enables companies to be more competitive.
Thirdly, Porter’s five forces model develops three successful and widely-used strategies. They are overall cost leadership strategy, differentiation strategy and focus strategy.
Among them, from my perspective, the most influential one is differentiation strategy. The five forces model put forward the threats of potential new entrants, the rivalry among current competitors and well as the bargaining power of the buyer, all of these exert great pressure on enterprises. They have to do a lot to sustain or acquire more market share and make profits. Differentiation strategy will make them develop some market mix that is different or better than their competitors or hard to be imitated by potential new entrants. Take P&G as the example, P&G always seeks to the disparity among different brands which are dealing with the same product. It put much effort on the function, package, propaganda and other aspects to develop distinctive brand feature and value. For instance, considering different customers may have different preference to product mix, P&G makes nine market segment and designs nine different brands to meet its customers’ needs. In this way, it is successful realizes its aim to enlarge customer base and retain customer loyalty. 3.2 Disadvantages of Michael Porter’s Five Forces Model
However, during the practice of Porter’s five forces, some companies as well as researchers criticize the five forces model for being too ideal and not so practical. Specifically, the limitations of the five forces model can be shown in three aspects. For one thing, this model can be fully practiced based on the assumption that the company or staff responsible for making strategy has a better knowledge about the whole line; however, it takes a too long time and hardly can be realized. For another thing, Porter’s five forces emphasize the competition among the same line which neglects the fact that competitors also can cooperate with each other. Thirdly, it suggests the scale of an industry is stable; however, market can be enlarged during sustainable development and innovation.#p#分页标题#e#
4.0 General View about Core Competence
Core competence will help companies adapt to various markets and it serves as the base for companies to enlarge their business. Besides, core competence can realize those interests that customers value most.
In the short term, a company’s competitiveness comes from the price of existing products or services. In the long term, the competitiveness will shift to the ability to reduce costs as well as meet customer needs more quickly than competitors. (Cynthia & Michael, 1991)
The strategy of developing a company’s core competence aims to make company gain profit, acquire certain market share, establish a good image as well as recognized and well-accepted by publics through its capability of utilizing production factors efficiently. It is a basic competitive power to help companies sustain a stable and high competitive ability over their opponents.
Specifically, the core competence for modern enterprises is a mix of key resources and specialized skills which based on knowledge and innovation. This mix ensures the dynamic balance of competitive advantage for companies in a certain period.
Core competence can come from several aspects. It lies on a company’s human resource and its integration with corporation, a company must have a qualified even excellent specialists. Besides, core skills are indispensable in developing company’s core competence. Reputation also accounts for core competence. Certain companies manage to surpass competitors in research and development. They aim to gain long term profit and devote themselves to new products. Corporation culture is also important to establish a company’s core competence. Among all those aspects that develop a company’s core competence. The most influential and widely used technique is marketing strategy. Some companies utilize the 4Ps theory i.e. product, price, place, promotion (McCarthy, 1960) to provide products and service to meet customers’ specialized needs. Others may seek competitive advantage through the marketing network. They attach great importance and invest a lot of money and time in product selling, market research, market promotion, technical support and market expansion.
Since there are so many aspects that companies should pay attention to, sometimes it is difficult for companies to distinguish core competence from other capabilities. There are several features of core competence. First, the core competence can provide benefit or meet the ultimate need of its customers. Second, core competence must be unique and hard to be imitated. Third, it should also capable of extending, that is to say, core competence can help company to open other market and can promote company’s competence in other products and service.
For P&G, its core competence mainly lies in its market strategy. P&G develops a multi-brand strategy. As a major manufacture of daily products, its business covers nearly all lines concerning our daily life, ranging from cleaning products to food, paper, medicine and so on. Taking advantage of its sufficient capital, P&G realizes a vertical integration. Though the multi-brand strategy costs more and risks more, it is more flexible and allows P&G fill up its space on supermarket shelves. (Ian, 2010) Through this strategy, P&G establish a stable and good image in customers. Apart from using multi-brand strategy，P&G also practice differentiation strategy. P&G always seeks to develop distinctive features for each of its products. It develops different interest mix to meet various needs of its customers.
The competence that distinguished P&G from other competitors also lies in its ability of establishing its brand value. A good brand name can help companies easily recognized and generate customers’ association as well as reduce promotion costs. Each product of P&G well exemplifies the characteristics of the product and the position. P&G also excels in using knowledge-based marketing to enhance its brand value. Exploiting knowledge into the practice of marketing will help companies constructing successful market brands. (Ian, 2004) During the process of marketing, P&G fully utilizes knowledge and ideas.
All those above marketing strategies used by P&G constitute its core competence. They not only help P&G establish a good image and high reputation in the society and among the public, but also develop a large number of loyal customers as well as retain a high customer satisfaction which make the company gain a sustainable advantage in the daily products line. 4.1 Advantages of Core Competence
Core competence mainly applied by those companies which seek long-term development. Once it is established, core competence can bring a lot of benefits to companies.
First of all, core competence surpasses the concrete product and service and liven the competition among companies up to a higher level that is the competition of the overall strength of companies. In this way, it helps companies reduces the number of competitors and all companies need to do is to focus on those strong competitors. The overall strength of companies can reflect the objective need of long-term development for companies and avoid some strategic mistakes caused by short insight. For P&G, it has a long history and seeks to retain its high proportion of market share.
Secondly, core competence can strengthen the competitive status of companies in related markets. Core competence is not just a single competence; it is a mix of several factors. Companies that develop a strong core competence usually have a more insightful idea over the market, thus it is relatively easier for them to diversify their business and manufacture other related products.
Last but not least, core competence is accumulated by rich experience and knowledge through a long period. Therefore, it can hardly be attacked, imitated and surpassed. 4.2 Disadvantages of Core Competence
Just as mentioned in the advantages of core competence, the uniqueness of core competence can make the company has distinctive advantages over others, meanwhile, if the company faces with a very strong competitor who also has its own core competence, it will have more obstacles for the company to tackle with.
Generally speaking, core competence can help big companies a lot in their marketing. However, it is a long way to go for small and new entrants of a line. For small-sized companies and new entrants, they have to invest a large sum of money on constructing core competence and it usually takes several years to make the core competence outstanding.
Moreover, small enterprises and new entrants may come across difficulties in recognizing core competence. There are dozens of factors that involved in a business, but not all those factors should be attached great importance to. The main difference between core competence and capacities lies in the recognition of Penrose or any other prior work. (Anders, 2002) So it is a requirement for companies to evaluate these factors as well as evaluate its own business by using the SWOT Analysis. After that, companies can combine those things together and judge which factors they will focus on. 4.3 Measures to take
Concerning the problem that it is not easy for companies to recognize which aspect they should concentrate on, companies have to do a general overview of factors influencing their business most. Companies can compare their own performance with other companies in this line and find out in what aspects they overshadow competitors. After it recognizes those competences, company can further evaluate on them and to test whether those competences have the characteristics of core competence. Companies can using questions to help them judge. Those questions may include: whether the competitive power is suitable to the development and competitive strategy of the company? Is it in accordance with the goal and long term plan of the company? Is it helpful in improving the efficiency of corporate management as well as reducing costs? Is it typical and helpful to company in carrying out the differentiation strategy? Is it good to the expansion of scope of business?
With the help of those questions, companies can distinguish the core competence from other competence.
After recognizing its core competence, company still needs to take many efforts in building and improving the core competence of a company. Basically, this can be realized through both internal ways as well as external ways. From the perspective of internal ways, companies should cultivate a good and unique corporation culture. Both companies and its staff in every sector should value and concern the cultivation of core competence. It is also of great significance for companies focus on the specialization of a certain field. Innovation is another aspect that should be valued, especially in some technology-based companies. Modern enterprise system also helps in building core competence.
Unlike the internal ways which mainly focus on the company itself and its staff, the external ways shift its focus to the partner and stakeholder. External ways emphasize the efficiency of knowledge ally. Through acquire more knowledge, companies can better adapt to the ever-changing market. Another way is merger and acquisition. Merger and acquisition could have the effect of simply knocking one rival company out of the market. (Brian, 2000)
Customer’s views toward the product are the driving force in shaping appropriate product decision. (Art Weinstein, 2004)#p#分页标题#e#
No doubt, developing a stable customer base is urgent for every company.
5.0 Conclusion
Though, Michael Porter’s five forces model has some defects and is difficult for a company to consider the whole five forces when a company makes strategy, the model still benefits company in several aspects. It proves to be very effective in many aspects, especially in differentiation strategy. Those insights it gives to enterprises prove to be quite practical.
The core competence may cause some obstacles and have limitations for those small-sized companies and new entrants. However, once it is established, core competence can bring a lot of benefits to the company.
All in all, both Porter’s five forces model and core competence theory bring more advantages than disadvantages. Companies can utilize their advantages and evaluate on them to choose a more suitable strategy. Together with other strategies, the five forces model will make enterprises have a better knowledge about market, its opponents as well as itself. The value chain analysis can enhance the ability of companies to compete in the global economy. (Hubert, 2005) Together with it, core competence can easier be identified and companies can concentrate on cultivating core competence in key sessions.
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