Explain how Michael Porter's Five Forces Model can be applied to examine the competitive environment in the business world.

In the business world, these are groups of organizations that compete directly and indirectly with each other to win orders, sales and market share. The five forces that Michael Porter used as a model to examine or rather explain the logic competition are:

• Threat of new entrants
• Threat of new substitute products or services
• Strength of bargaining power of suppliers
• Strength of bargaining power of customers
• Level of rivalry among existing companies in the industry

Michael Porter's model help in the following way:

• Helps the manager to decide whether his organization should remain in or exit out of the industry.
• Provides a rationale for increasing or decreasing resource commitment
• Help the manager to improve and assess his own organizational competitive position

Wheelen and Hunger (1998) expanded Porter's five forces model with a sixth force, by including the relative power of other stakeholders. These stakeholders may include the government, local communities and environmental groups (NGOs)

Part One

Define the meaning of strategic Management.

Strategic Management is the process through which an organization analyze, learn from their internal and external environments, develop strategic directions and create strategies that will help to achieve established goals and finally to execute those strategies to satisfy all stakeholders (Harrison and St.John, 2002). In strategic management or planning, the different elements do not have to appear in a sequential order. Rather, the different elements can occur in a permutation of sequences or simultaneously. Coulter (1998) states that strategic management is an ongoing and continuous cycle of strategy formulation, implementation and evaluation. The company that can do this continuously in a sustainable manner will be ahead of the competitors. Too often, many companies do not have this sustaining power. Along the way, they sometimes slack and that is when the competitors will overtake them. Toyota corporation is a good example of a company that executes strategic management in a very consistent manner. Dess (2004) defined strategic management as the analysis, decisions and actions that an organization undertakes in order to create and sustain competitive advantage. This definition captures two basic elements of strategic management. The first being that strategic management is concerned with the hierarchy of strategic goals along with the analysis of the internal and external environment of the organization, the decisions to address the question of what industries to compete in and how to compete and the necessary actions or tasks that are needed to implement the strategies. The second element is the essence of strategic management. It concerns the study and analysis of why some companies outperform others.