The ultimate goal of any business organization is to make a profit. There are many factors that affect long-term profitability, including demand availability, technological adoption, economies of scale, marketing strength, among others. The greatest among these is the ability to compete strategically with rivals and maintain a competitive edge. Keeping tabs on the established competition and finding ways to outmaneuver them requires knowledge of not just the direct rivals but also indirect unseen competitive forces. In total, these are usually five (5) competitive forces that shape an organization's strategy. The organization selected for this project is Eagle Materials Inc., which is a leading m manufacturer of construction materials used for residential, industrial, and commercial purposes.
The first force is the threat of new entrants, which presents itself in the form of new aspiring competitors armed with new techniques and hungry for a market share. These new entrants can wreck investments required to maintain a competitive advantage. Businesses can respond by investing more in R&D and also adjusting the fixed costs to drive them out of business. The second force is the threat of powerful suppliers who inflate the process of vital raw materials and threaten the profit margin. Businesses can neutralize supplier power by sourcing more vendors. The third force that shapes strategy is the threat of savvy customers who force down prices by playing competitors against each other, i.e., by shifting loyalty to the lowest bidder. To overcome consumer power, organizations should specialize and expand their products and services in way customers will not defect to rivals. Fourth, there is the threat of substitute products. The only way to overcome this is to expand product and service lines and improve their accessibility to consumers. Finally, price wars initiated by established competitors are the final force that shapes strategy. To neutralize this, organizations need to invest heavily in more superiors products that differ from those offered by competitors.
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