Managing an organization is not the only challenge managers get or try to solve. It is very common and in nature to have competitive forces that challenges the organization but gives it more power and motivation to reach and strive for more. Sometimes, managers don't take competitions seriously, not knowing that these competitive forces might be the basis for an organization to succeed or failed. Commonly, there are five competitive forces that shape the strategy of an organization. Let me discuss it one by one and I will also relate it to the previous organization where I belong.
As these five forces might differ in form in different types of organization, the underlying drivers of profitability are the same. We all know that to sustain long-term profitability, an organization must respond strategically to competition. By understanding how the five competitive forces influence profitability in the industry, we can develop a strategy for enhancing the organization's long-term profits.
Rivalry Among Existing Competitors
Rivalry happens between organizations when there is a large number of same type of organization since these organizations must compete for the same customers and resources. Also when there is a slow market growth and high exhibit of barriers. In my organization, the University of Mindanao, this institution has already established its standards regarding higher education. But still, rival schools exist specially in Davao. Thought UM has been operating for a very long time, the administration are still concerned on how to deal with existing competitors. In the Tagum Branch, even though there are only few schools that offer higher education degrees, UM still considers these schools as competitors. Some of the rival schools of UM in Tagum is the St. Mary's College, University of South Eastern Philippines, and other technical-vocational schools that offer 2-year courses such as AMA Computer Learning Center and STI College. With these existing schools, it is a challenge for UM to maintain their educational standards and to find ways on how to keep UM as the school for everyone.
Threat of Substitutes
A threat of substitutes exists when a product or service's demand is affected by the change of price or amount of a substitute product. As for the academe, I think I can relate this factor with the entrance of Technical-Vocational Courses and the schools that offers them. UM offers 4-year courses and does not cater 2-year courses except for the Caregiver course which is only taken for 6 months. Nowadays, students are looking for an easy escape and finds these 2-year courses easier to surpass as this might help them get hired for jobs faster. That's why every time UM markets for their 4-year courses, we always indicate and insist that most companies hire graduates who finished a 4-year course, which I know is evidently true.
Threat of New Entrants
It is not only the existing rivals that pose a threat to organizations. The possibility of new organizations or companies may enter the industry also affects competition. This another challenge that any organization might face. As for UM, though their educational standards and integrity are already established, it is still a matter of marketing strategies that may bar the entry of new schools. Some of the new schools that can be considered as rivals of UM only offers 2-year courses such as Academia de Davao, TCIT, and ACES College.
Bargaining Power of Customers
The power of the customers is the impact they produce in the industry. If there is a great demand form customers, example is the stopping of tuition fee increase for schools, there is a great power from them to negotiate. In UM, the very common problem and issue usually raised by students is the increase of tuition fee each year. Some activists had rallies and some initiated a signature campaign. I think UM had it in control because there were years that they have imposed a NO TUITION FEE INCREASE and that, I think, is the effect of the power of customers.
Bargaining Power of Suppliers
Unlike producing industries that requires raw materials from suppliers, an academe such as UM still has a challenge with regards to Power of Suppliers. UM Tagum Branch depends on the supplies and support given by the UM Main Campus in Davao. Also, all the activities and all decisions done by the branches should be approved first from the main campus. And so, it is sometimes a challenge for the branches on how to convince the main campus and how to deal with consequences if ever requests are not approved. This shapes the strategical ability of the organization on how to solve the problem.
These days, we are introduced to these five forces for us to prepare ourselves with the challenge of competition. In the next coming years, there might be new forces that enters, but this shouldn't be a great threat to us, but instead a challenge to conquer everything.
No comments:
Post a Comment