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STRATEGY DEVELOPMENT
INTRODUCTION
The analysis phase has now been completed and its time to start developing your strategy.
Before you are going to formulate your strategy, it is however necessary to study and apply the strategic tools of "The Five Forces Model" and "The Activity Cost-Chain". These two very important strategic tools will help you to summarize and present all the information gathered in the analysis phase in a sensible manner. You can also view this process as data being transformed into useful information.
The information provided by the "five forces model" and the "activity cost-chain" will enable you to formulate your strategy more effectively. Let's start this phase by studying the strategic tools to see how they work and how to use them.
STRATEGIC ANALYTICAL TOOLS
The Five Forces Model of Competition
Although each industry has its own particular set of competitive characteristics and "rules of the game", there are enough similarities in the nature of competitive forces from market to market to allow the use of a common analytical framework. Generally speaking, competition in the marketplace is a function of five competitive forces.
The five forces model is a welcome ally in putting together a picture of the nature and intensity of competition in an industry - indeed; it is the best single tool for understanding the complexities of how competition works.
Professor Michael E. Porter of the Harvard Business School developed this model.
These famous five forces are:
The force arising from suppliers