Issues in Strategic Management
In the context of the global competition of the 21st century, an enterprise must make their own strategy which must be a master and comprehensive plan to compete with many other competitors. Actually, they need to establish, to maintain and to create their competitiveness so that they can gain its mission and objectives.
Among other business theorists, Hunger and Wheelans said that “Strategy is a master plan stating how the corporation will achieve its mission and objectives”.
Based on the above reasoning, the objective of this study is to compare and analysis the statement of Hunger and Wheelans with reference to Henry Mintzberg and Michael Porter’s Five Forces Model. Actually, these theorists have a great influence on today strategic management in Vietnam as well as in the global management. In this research, I also take an example about the strategy of … organization to illustrate for. DEVELOPMENT A strategic planning process includes considering, deciding and implementing strategies (Aloha, 1995) (1).
A strategy can be a stabilization strategy, a growth strategy or a retrenchment strategy (Wheelen and Hunger, 1995) (2). However, it must be suitable to a certain corporation’s mission and objective. Michael Porter had developed his theory called “Five Forces Model” which is a framework for the industry analysis and business strategy development. In fact, many strategic managers who are seeking to develop an edge over rival firms can use his model to help the firm in particular context to get their mission and objectives in planning.
Porter’s five forces include – three forces from ‘horizontal’ competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from ‘vertical’ competition: the bargaining power of suppliers and the bargaining power of customers.
These forces consist of company ability to serve their customers and their ability to make profits. These five force models are just some parts of the complete Porter strategic models. The other elements are the value chain and the generic strategies.
According to Porter, the five forces model should be used at the line-of-business industry level; it is not designed to be used at the industry group or industry sector level. A firm that competes in a single industry should develop, at a minimum, one five forces analysis for its industry.
Each enterprise should compete and develop its own forces to have a master plan for themselves. It is said that “Porter indirectly rebutted the assertions of other forces, by referring to innovation, government, and complementary products and services as “factors” that affect the five forces” (Michael E.
Porter, 2008) (3). Porter have attempted to move the understanding of industry competition from a static economic or industry organization model to an emphasis on the interdependence of forces as dynamic, or punctuated equilibrium, as Porter terms it. On the other hand, Henry Minztberg had provided definitions of strategy with his 5Ps included: Plan, Plot, Pattern, Position and Perspective which are general criteria to build up a master plan for a firm to gain their targets and mission.
Known as the guru of bottom-up management, Minztberg broke with convention by actually going inside companies to witness the business of business. Revealing how strategy is really formulated, he shows here that such successful strategy is rarely, if ever, born in solitary contemplation; rather, the elements usually come together in the heat of battle.