Comparison and Contrast of Two Strategic Management Systems – “five Forces” and “closed Loop”
Comparison and Contrast of Two Strategic Management Systems
“Five Forces” and “Closed Loop”
Thinking of the success of various companies, Michael E. Porter, Robert S. Kaplan and David P. Norton, developed some strategies to guide companies to achieve their goals. Porter developed his strategy that he called the “Five Forces” and it focuses on the external environment of various companies. Also, Kaplan and Norton focus their strategy that they have titled the “Closed Loop” and it is focuses on the internal environment.
According to Michael E. Porter, Bishop William Lawrence University Professor – based at Harvard Business School, author of The Five Competitive Forces, strategy essentials is to understand the industrys structure and deal with the problems with competence. In order to help companies to achieve their goals Porter introduces the “Five Forces.” Each force features an individual strength that helps companies to be competitive. Its strength features a combination of economic and technological growth of which the companies can take advantage. Anticipating both the positive and negative changes in a companys structure and addressing various efficiency problems is a major objective in the “Five Forces” strategy.
Apple is a good example for the “Five Forces” strategy being used in todays world. Apple Inc., founded in 1976 and incorporated in 1977 by Stephen Gary Wozniak with co-founders, Steve Jobs, and Ronald Wayne, keeps their focus on creating a wide array of technical products. Apple has a concentrated business line; they are basically a
“FIVE FORCES” AND “CLOSED LOOP”
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supplier of electronic goods and services. Suppliers can affect their pricing and costs because of the availability of raw materials (circuits, wires, etc.). Since labor is a key component in the manufacturing and it could be affected by the minimum wage or labor unions. Apple outsources the manufacture of almost all of its products. Apple has high focuses and well-established customer support. These actions by the company give it even more power over the suppliers. As a well-equipped company, Apple is able to compete at the same level with other big companies such as Hp, Dell, Toshiba, etc. Apple takes advantage of their close relationship with the customer to improve and also create new and customized products. Although, Apple does have substitutes for its products, the uniqueness of its products and their brand make Apple a very profitable company.
According to Robert S. Kaplan, Baker Foundation Professor at Harvard Business School and Chairman of Professional Practice, at the Palladium Group and David P. Norton, Founder and Director of the Palladium