Question

Answer the questions posed in the memo as thoroughly as you can given the case data. The Summary and Overall Recommendation(s) should summarize and highlight your key findings and provide an overall assessment of Time Warner’s viability and future course of action.

Memo 3 To: Junior Executive, Strategy Group From: Vice President, Strategy Group Re: Strategic Analysis re For our upcoming executive retreat, the Strategy Group has been tasked with competing a strategic analysis of our business and our industry. While there are a number of different approaches that we can take, would like to rely on Porter's "Five Forces" framework for our analysis of the industry structure. Please provide an outline of each of the five forces as it relates to the cable industry and whether conditions in the industry are favorable to long-term profitability.

Answer 1

Ans

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps in identifying an industry structure to determine corporate strategy and industry's weakness and strengths .

The porter 5 forces are:

1. Threats of new entrants.

New entrants brings innovation and put pressure on cable industry through lower pricing strategy and providing new value to the customers. The cable industry has to manage all these challenges and build effective barriers to safeguard its competitive edge.The threats of new entrants can be managed by innovating new products and services and by achieving economies of scale.

2. Bargaining power of suppliers.

The overall impact of higher supplier bargaining power is that it lowers the overall profitability as it decreases the margin the cable industry can earn from the market.It can tackle the bargaining power of suppliers by building efficient supply chain with multiple suppliers and also experimenting different product designs using different materials so that if the price of raw material goes up of one raw material it can shift to another raw material.

3. Threats of substitute products or services.

When a new product or service meets a customer needs in different ways industry profitability suffers. The cable industry can tackle the threat of substitute by being service oriented rather than only product oriented.

4. Rivalry among the existing competitors.

The rivalry against the existing competitors will decrease the overall profitability of the industry . The cable industry can tackle the situation of rivalry against the existing competitors by collaborating with competitors to increase the market size rather than just competing for small market.

5. Bargaining power of buyers.

The smaller and powerful the customer base is the higher the bargaining power of the customers which increases their ability to seek increasing discounts and offers.The cable industry can tackle the bargaining power of buyer by building a large customer base and innovating new products since customers seek discount on established products.

By analyzing the porter's 5 forces model on the cable industry it can be concluded that if the strategist gain a complete picture of what impacts the profitability of the organisation in the industry then they can swiftly respond to the emerging opportunity and can shape the porter's 5 forces in their favor.