Critical Analysis

Richard A . D 'Aveni and Michael E . Porter have both written about strategies to deal with competition . However the strategies that they suggest differ in terms of their focus on environmental analysis . Both contextualize environmental analysis in terms of competitive pressures . However they suggest different strategies to deal with the threat of competitive pressures . According to D 'Aveni , environmental analysis can be conducted in four areas : the price-quality arena , the know-how /timing arena , the stronghold creation /invasion arena and the deep pockets arena . This is in contrast with Porter 's framework for

br environmental analysis in which the analytical model consists of the threat of new entrants , the threat of substitute products , the threat of competitive intensity , the bargaining power of buyers and the bargaining power of suppliers . These analytical models lead to different strategies in terms of dealing with environmental threats . D 'Aveni develops the new 7 S 's approach while Porter develops the approach of strategic positioning . Both endeavors provide a framework for environmental analysis

Porter 's approach to environmental analysis is popularly known as the five forces analysis . The first of these forces is the threat of new entrants . This threat is minimal in capital intensive industries Therefore for companies like General Motors and Chrysler , the threat is minimal because entering the automotive manufacturing industry means investing substantial resources in to build up the necessary plant and equipment . Therefore this industry is characterized by high entry barriers which lead to a low threat of new entrants...