(a) In light of Michael Porter's Five Forces, new entrepreneurs often face
significant barriers that restrain their keenness to enter an industry. These
barriers increase the competitiveness of existing firms and discourage
new entrants, impacting industry profitability.
Common barriers that may restrain new entrepreneurs include:
(i) Capital Requirements: When a large amount of capital is required to
enter an industry, firms lacking funds are effectively barred from the
industry, thus enhancing the profitability of existing firms in the
industry.
(ii) Economies of Scale: Many industries are characterized by economic
activities driven by economies of scale. Economies of scale refer to
the decline in the per-unit cost of production (or other activity) as
volume grows.
(iii) Product Differentiation: Product differentiation refers to the
physical or perceptual differences, or enhancements, that make a
product special or unique in the eyes of customers.
(iv) Switching Costs: To succeed in an industry, new entrant must be
able to persuade existing customers of other companies to switch to
its products. When such switching costs are high, buyers are often
reluctant to change.
(v) Brand Identity: The brand identity of products or services offered by
existing firms can serve as another entry barrier. Brand identity is
particularly important for infrequently purchased products that carry
a high unit cost to the buyer.
(vi) Access to Distribution Channels: The unavailability of distribution
channels for new entrants poses another significant entry barrier.
Despite the growing power of the internet, many firms may continue
to rely on their control of physical distribution channels to sustain a
barrier to entry to rivals.
(vii) Possibility of Aggressive Retaliation: Sometimes the mere threat of
aggressive retaliation by incumbents can deter entry by other firms
into an existing industry.
(b) Strategic performance measures are key indicators used by organizations
to track the effectiveness of their strategies and make informed decisions
about resource allocation. These measures provide a snapshot of
performance, enabling leaders to assess whether their strategies align
with
organizational
goals
and
make
necessary
adjustments
for
improvement.
Types of strategic performance measures include:
1.
Financial Measures: These include revenue growth, return on
investment (ROI), and profit margins, which help in understanding the
financial performance and profitability of the organization.
2.
Customer Satisfaction Measures: Metrics like customer satisfaction,
retention, and loyalty give insights into how well the organization
meets customer needs and the quality of its products and services.
3.
Market Measures: Market share, customer acquisition, and referrals
indicate the organization’s competitiveness and ability to attract and
retain customers in the marketplace.
4.
Employee Measures: Employee satisfaction, turnover rate, and
engagement provide insights into the organization’s ability to create
a positive work environment and retain talent.
5.
Innovation Measures: These include R&D spending, patent
applications, and new product launches, reflecting the organization's
capacity to innovate and meet evolving customer demands.
6.
Environmental Measures: Environmental measures such as energy
consumption, waste reduction, and carbon emissions offer insights
into the organization's impact on the environment. These measures
help track sustainability efforts and ensure that the organization is
operating in an eco-friendly and socially responsible manner.
These measures help organizations ensure their strategies are
effectively executed, aligned with their objectives, and adaptable to
changes in both market and environmental contexts.
Or
Any organisation may find the work of digital transformation challenging
and overwhelming. To ensure that a digital transition is effective, change
FINANCIAL MANAGEMENT AND
STRATEGIC MANAGEMENT
management is essential. Here are some pointers for navigating change
during the digital transformation:
1.
Specify the digital transformation’s aims and objectives: What is
the intended outcome? What are the precise objectives that must be
accomplished? It will be easier to make sure that everyone is on the
same page and pursuing the same aims if everyone has a clear grasp
of the goals.
2.
Always, always, always communicate: It might be challenging for
people to accept change and adjust to it. Ensure that you routinely
and honestly discuss the objectives of the digital transformation and
how they will affect stakeholders, including employees, clients, and
other parties.
3.
Be ready for resistance: Even when a change is for the better, it can
be challenging for people to embrace it. Have a strategy in place for
dealing with any resistance that may arise.
4.
Implement
changes
gradually:
Changes
should
ideally
be
implemented gradually rather than all at once. In order to avoid
overwhelming individuals with too much change at once, this will give
people time to become used to the new way of doing things.
5.
Offer assistance and training: Workers will need guidance in the
new procedures, software applications, etc.
In conclusion, effective completion of the massive project known as
digital transformation depends on meticulous planning and change
management. Digital transformation efforts are more likely to fail without
change management. Organizations can successfully integrate a new
digital system by planning for and managing the changes that must take
place. Any project involving digital transformation must include it.