Competitive Forces Model and Knowledge Management Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA

Competitive Force Model New entrants Suppliers Buyers Substitutes Industry competitors Intensity of rivalry Bargaining power of suppliers Bargaining power of buyers Threat of substitutes Threat of new entrants Entry barriers Economies of scale Proprietary product differences Brand identity Switching cost Capital requirements Access to distribution Government policy Expected retaliation Determinants of supplier power Importance of volume to supplier Presence of substitute inputs Switching cost... Determinants of buyer power Bargaining Leverage Price Sensitivity Buyer volume Brand identity Switching cost Product differences Buyer information Buyer profits …. Determinants of substitution threat Relative price/performance of substitutes Switching cost… Rivalry Determinants Industry growth Brand identity Switching cost…. (Source: Porter, 1980)

FIVE COMPETITIVE FORCES MODEL THE FIRM TRADITIONAL COMPETITORS NEW MARKET ENTRANTS SUPPLIERS SUBSTITUTE PRODUCTS & SERVICES CUSTOMERS Threats Bargaining power N

FIVE COMPETITIVE FORCES MODEL THE FIRM TRADITIONAL COMPETITORS NEW MARKET ENTRANTS SUPPLIERS SUBSTITUTE PRODUCTS & SERVICES CUSTOMERS Threats Bargaining power N Internal Forces 1.customer focus 2.communication 3.core compentencies 4.complexity 5.quality Source: Knowledge: the key to organisational survival, Raeside and Walker, the TQM Magazine, 2001

Competitive Forces Knowledge management is the main competitive force. -- Quintas et al., 1997 Source: Knowledge: the key to organisational survival, Raeside and Walker, the TQM Magazine, 2001, p.157 Organizations should stratify the management of customers based on principles of quality (satisfaction), cost/profit, and future profitability potential.

Competitive Forces (cont.) The success does not necessarily go to the firms that know the most, but to the firms that can make the best use of what they know and know what is strategically most important to the firm and to the society. Therefore, firms should become “learning organizations” to maximize their knowledge base.

EnablersResults Innovation and Learning IT & Resource People Results Customer Results Society Results Content/ infrastructure Key Performance Results Leadership Processes People Policy & Strategy Partnership & Communities Modified European Quality Model: e-Learning Source: Knowledge: the key to organizational survival, Raeside and Walker, The TQM Magazine