You will prepare and submit a term paper on Approaches of Michael Porter and Gary Hamel. Your paper should be a minimum of 2000 words in length. The organizations, which have average market share, do not get high profits, a situation that necessitates changes in resource utilization and management strategies that the company must use to achieve the intended goal.
In business, the industrial-organizational approach relies on economic theory to describe different markets and resources. The basic issues under this approach include competitive rivalry, economies of scale and resource allocation. The choice of a business model in a company will have profound effects on the organization’s rate of revenue, the competitors in the market, and the capital needed. In general, the business model creates the essence of the breakthrough idea. A company may be tempted to integrate more than one business model in its operations. This is a make-or-break decision that the management needs to tactfully make as they lead the company towards its goals and mission (Hosmer, 2007). Consultations have to be made on the different models that exist and those that would suit the company’s profile. In addition, these consultations have to involve advisors from the industry but who are dealing in different product lines, as well as get the advice of a different trusted advisor from an entirely different industry so as to have out-of-the-box thinking. The result will be contradicting as the advice from the different advisors may conflict, and the business models’ financials have to be undertaken.
The relationship between industry structure and competition needs to be reconsidered and explore more rigorous and sophisticated approaches such as game theory (Hill & Jones, 2009). Porter’s five forces act as a diagnostic tool for industry structure. The model revolves around five competitive industry forces that erode long-term industry average profitability. The ultimate function of the model is to explain the sustainability of .profits against bargaining and against the direct and indirect competition. The five forces that shape business strategy are the threat of entry to the market from other organizations. .